CFR, Inc. purchased a 10% interest in The Candy Company on January 2, 2013.The purchase price was $400,000. CFR's officers constitute a majority of TheCandy Company's board of directors. The investee reported net income of$500,000 and paid dividends of $150,000 in 2013. On the December 31, 2013,balance sheet, what amount should CFR report as Equity Investment in TheCandy Company?a. $900,000b. $870,000c. $800,000d. $830,000The answer is B, but I don't understand why

The consolidation method refers to a specific accounting approach used when an investor exercises…

Answered: CFR, Inc. purchased a 10% interest in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Dazed Corporation paid $ 387,000 for 30% of Dawson Corporation outstanding common stock on January 1, 2010. Dawson shareholders equity on January 1, 2010 was $ 500,000 consisting of $ 300,000 common stock and $ 200,000 retained earnings. During 2010 Dawson had net income of $ 120,000 and on November 1, 2010 paid dividends of $ 50,000. Dawson assets and liabilities were stated at fair value on January 1, 2010 except for building with a remaining useful life of 20 years that was overstated by $60,000 and equipment with a remaining useful life of 10 years that was understated by $ 150,000 ANSWER THE QUESTIONS THAT FOLLOW What is the balance in the Investment account on at December 31, 2010 What is the amount of goodwill paid Provide all entries necessary in Dazed books for 2010 to account for its investment in Dawson WHICH ACCOUNT IS DEBITED FOR $ 387,000 What is Dazed investment income for 2010 What is the amount of dividends received Choose... Choose... Choose... Choose... Choose...
Specific Motor Inc., makes and sells commercial vehicles. By December 31, 2018, the company reported retained earnings of $306,000. Since the company needs $2,000,000 to expand its business, its Board of Directors authorized the issuance of 2,000,000 share of $1 par value common stock in December 2018. The following transactions occurred in 2019. On January 24, Specific Motor issued 500,000 shares of its $1 par-value common stock at a market value of $3 cash per share. On March 15, Specific Motor found that it understated its revenue of 2016 from a major customer, Center Inc. for a net (after tax effect) of $41,000. On June 16, Specific Motor purchased 90,000 shares of treasury stock at $6 per share. On August 7, the board of Specific Motor declared cash dividends of $0.20 for each share of common stock outstanding on that day. The date of record was set to be September 30 and the date of payment (distribution) was set to be November 4. On September 30, Specific…
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. The company buys debt securities, intending to profit from short- term differences in price and maintaining them in an active trading portfolio. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2023. March 31 Acquired 8% Distribution Transformers Corporation bonds costing S 430,000 at face value. September 1 Acquired $990, 000 of American Instruments' 10% bonds at face value. September 30 Received semiannual interest payment on the Distribution Transformers bonds. October 2 Sold the Distribution Transformers bonds for $470,000. November 1 Purchased $1,550, 000 of M&D Corporation 6% bonds at face value. December 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are American Instruments bonds S 943, 000 M&D Corporation bonds S 1,613,000 (Hint: Interest…
Prepare the journal entries for an investment accounted for under the equity method. a. On January 2, 2017, Workowski Corporation purchased 55,000 shares (26%) of Wendy Company at a cost of $8 per share. b. At the end of 2017, Wendy Company reported net income of $350,000 (Workowski’s share is 26%). c. Wendy Company reported a $215,000 net loss for 2017. Workowski’s share of the loss is 26%. d. In early 2018, Wendy Company paid a $75,000 dividend. Workowski’s share is 26%.
The following investment-related transactions were completed by the company during 2021: Purchased P3,000,000.00 of ABC Corporation 7% bonds, paying 102.5 plus accrued interest of P52,500.00. In addition, the company paid brokerage fee of P15,000.00. The company classified these bonds as a trading security. • Purchased 30,000 shares of XYZ Corporation ordinary shares at P125 per share plus brokerage fees of P28,500. The company classified this stock as available for sale. Received semi-annual interest on the ABC Corporation bonds. Sold 4,500 shares of XYZ Corporation at P132 per share. Sold P480,000 of ABC Corporation 7% bonds at 102, plus accrued interest of P2,790.00. Determine the current portion of the investments.
Assume that Horicon Corp acquired 25% of the common stock of Sheboygan Corp. on January 1, 2015, for $300,000. During 2015, Sheboygan Corp. reported net income of $160,000 and paid total dividends of $60,000. If Horicon uses the equity method to account for its investment, the balance in the investment account on December 31, 2015, will be:
Could you please solve the question for the investment in BI.
.During 2012 Logic Company purchased 4,000 shares of Midi, Inc. for P30 per share. The investment was classified as a trading investment. During the year Logic Company sold 1,000 shares of Midi, Inc. for P35 per share. At December 31, 2012 the market price of Midi, Inc.’s shares was P28 per share. What is the total amount of gain/(loss) that Logic Company will report in its income statement for the year ended December 31, 2012 related to its investment in Midi, Inc. shares? a. (P8,000) b. P5,000 c. (P3,000) d. (P1,000)
Pearl Corporation paid $300,000 on January 1, 2010 for a 35% interest in Sandlin Inc. On January 1, 2010, the book value of Sandlin's stockholders' equity consisted of $400,000 of common stock and $400,000 of retained earnings. All the excess purchase cost over book value acquired was attributable to a patent with an estimated life of 5 years. During 2010 and 2011, Sandlin paid $6,000 of dividends each quarter and reported net income of $120,000 for 2010 and S160,000 for 2011. Pearl used the equity method. Required: 1. Calculate Pearl's income from Sandlin for 2010. 2. Determine the balance of Pearl's Investment in Sandlin account on December 31, 2010
On January 1, 2017, Vancouver Corporation paid $400,000 to purchase 40% of the outstanding voting stock of Montreal Corporation. The equity method is used to account for the investment. The following data relate to this investment.2017∙ Dividends received from Montreal Corporation amounted to $20,000.∙ Net income reported by Montreal Corporation was $200,000.∙ Current market value of Montreal Corporation investment on December 31, 2017, was $700,000.2018∙ Dividends received from Montreal Corporation amounted to $30,000.∙ Net income reported by Montreal Corporation was $300,000.∙ Current market value of English Court Corporation investment on December 31, 2018, was $860,000.∙ The investment was sold on December 31, 2017, for $830,000.Prepare all journal entries for 2017 and 2018 relating to Vancouver Corporation's investment in Montreal Corporation.
Porter Corporation purchased 80% of the common stock of Salem Company for $850,000 on January 1, 2013. During the next three years, Salem had the following income and Dividends paid: Year Income Dividends 2013 $100,000 $25,000 2014 $110,000 $35,000 2015 $170,000 $60,000 Prepare the journal entries made under both methods and then compute the ending balance in the "investment" account under both methods.
The following information relates to Crip Crippy Investment of HIJ Corporation. (1). Purchase investment for $1,000,000 on January 1, 2009 (2) HIJ Corporation had earnings of $600,00 at December 31, 2009 and declared dividends of $400,000. (3) The dividends were paid on January 2, 2010. (4) On July 1, 2010 Crip Crippy sold fifty percent of its interest for $ 400,000 (5) At June 30, 2010, HIJ had earnings of $600,000 for the year and paid dividends of $200,000 for shares outstanding as at November 30, 2010. Requiement: Using the cost and equity method, record all entries from January 1, 2009 to December 31, 2010 using the following scenarios (a) Crip Crippy purchased 40% of HIJ Corporation (b) Crip Crippy purchased 18% of HIJ Corporation

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