Darlene Inc. purchased 23,600 common shares (20%) of Carlyle Ltd. on January 1, Year 4, for $306,800. It did not have significant influence over Carlyle. It elected to classify the investment as fair value through OCI. On September 30, Year 5, Darlene obtained significant influence when there was a restructuring of the Board of Directors. Accordingly, Darlene adopted the equity method on prospective basis. Additional information on Carlyle for the two years ending December 31, Year 5, is as follows: Market value per share at end of period $14.00 14.60 15.00 Period Year 4 Jan. Sept. Year 5 Oct.-Dec. Year 5 Net Income $186,000 146,000 59,000 Period Year 4 Jan. Sept. Year 5 Oct. -Dec. Year 5 Dividends Paid $126,000 106,000 29,000 On January 1, Year 6, Darlene sold its investment in Carlyle for $354,000. Required: (a) Calculate the balance in the investment account at the end of each period. (Omit $ sign in your response.) Investment $330400 $ 344560 $

Darlene Inc. purchased 23,600 common shares (20%) of Carlyle Ltd. on January 1, Year 4, for $306,800. It did not have significant influence over Carlyle. It elected to classify the investment as fair value through OCI. On September 30, Year 5, Darlene obtained significant influence when there was a restructuring of the Board of Directors. Accordingly, Darlene adopted the equity method on prospective basis. Additional information on Carlyle for the two years ending December 31, Year 5, is as follows: Market value per share at end of period $14.00 14.60 15.00 Period Year 4 Jan. Sept. Year 5 Oct.-Dec. Year 5 Net Income $186,000 146,000 59,000 Period Year 4 Jan. Sept. Year 5 Oct. -Dec. Year 5 Dividends Paid $126,000 106,000 29,000 On January 1, Year 6, Darlene sold its investment in Carlyle for $354,000. Required: (a) Calculate the balance in the investment account at the end of each period. (Omit $ sign in your response.) Investment $330400 $ 344560 $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Darlene Inc. purchased 23,600 common shares (20%) of Carlyle Ltd. on January 1, Year 4, for $306,800. It did not have significant influence over Carlyle. It elected to classify the investment as fair value through OCI. On September 30, Year 5, Darlene obtained significant influence when there was a restructuring of the Board of Directors. Accordingly, Darlene adopted the equity method on prospective basis. Additional information on Carlyle for the two years ending December 31, Year 5, is as follows: Period Year 4 Jan. Sept. Year 5 Oct.-Dec. Year 5 Net Income $186,000 146,000 59,000 Period Year 4 Jan. Sept. Year 5 Oct. -Dec. Year 5 Dividends Paid $126,000 106,000 29,000 On January 1, Year 6, Darlene sold its investment in Carlyle for $354,000. Required: (a) Calculate the balance in the investment account at the end of each period. (Omit $ sign in your response.) Investment $330400 Market value per share at end of period $ 344560 $ $14.00 14.60 15.00
Concord Corporation purchased 360 shares of Sherman Inc. common stock for $11,900 (Concord does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.50 per share. Prepare Concord' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)
Riverbed Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Riverbed does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share. Prepare Riverbed journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries, Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Sunland Corporation purchased 370 shares of Sherman Inc. common stock for $ 13,100 ( Sunland does not have significant influence). During the year, Sherman paid a cash dividend of $ 3.00 per share. At year-end, Sherman stock was selling for $ 37.50 per share.Prepare Sunland's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the purchase of the investment enter a debit amount enter a credit amount enter an account title to record the purchase of the investment enter a debit amount enter a credit amount (b) enter an account title to record…
Marigold Corporation purchased 440 shares of Sherman Inc. common stock for $14,400 (Marigold does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share.Prepare Marigold's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)
Fast Ltd. is a public company that prepares its consolidated financial statements in accordance with IFRS. Its net income in Year 2 was $200,000, and shareholders' equity at December 31, Year 2, was $1,800,000. Mr. Lombardi, the major shareholder, has made an offer to buy out the other shareholders, delist the company, and take it private. Thereafter, the company will report under ASPE. You have identified the following two areas in which Fast's accounting principles differ between IFRS and ASPE. 1. Fast incurred research and development costs of $500,000 in Year 1. Thirty percent of these costs were related to development activities that met the criteria for capitalization as an intangible asset. The newly developed product was brought to market in January, Year 2 and is expected to generate sales revenue for 10 years. 2. Fast acquired equipment at the beginning of Year 1 at a cost of $100,000. The equipment has a five-year life with no expected residual value and is depreciated on a…
ces Right Company purchased 17,000 common shares (20%) of ON Inc. on January 1, Year 11, for $267,000. Right uses the equity method to report its investment in ON because it has significant influence in the operating and investing decisions made by ON. Right has no legal obligation to pay any of ON's liabilities and has not committed to contribute any more funds to ON. Additional information for ON for the four years ending December 31, Year 14, is as follows: Year Year 11 Year 12 Year 13 Year 14 Net Income $ 370,000 (470,000) (570,000) (670,000) Dividends Paid $65,000 65,000 0 Market Value per Share at December 311 Investment, beginning of year Cost Equity method income Dividends received Impairment loss Investment, end of year $22 8 1 Required: (a) Calculate the balance in the investment account for each of the Years 11 through 14. Assume that the market value is used in determining whether the investment is impaired. (Leave no cells blank - be certain to enter "0" wherever required.…
Choose the correct. On January 1, Puckett Company paid $1.6 million for 50,000 shares of Harrison’s voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies the equity method. Harrison declared a $2 per share dividend during the year and reported net income of $560,000. What is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31?a. $1,724,000b. $1,784,000c. $1,844,000d. $1,884,000
Herbst Enterprises purchased equity securities in Year 1 and classified them as available-for-sale. They reported an unrealized gain in Year 1 and an additional unrealized gain in Year 2. They decide to sell the securities in Year 3 for $28,000 more than the fair value recorded in Year 2. Based on this, Herbst needs to report the realized gain as dividend revenue. O restate the Year 1 and Year 2 financial reports to change the unrealized gains to realized gains. report the realized gain under other comprehensive income. O make a reclassification adjustment for the securities they sold.
Indigo Corporation purchased 370 shares of Sherman Inc. common stock for $13,100 (Indigo does not have significant influence). During the year, Sherman paid a cash dividend of $3.00 per share. At year-end, Sherman stock was selling for $37.50 per share. Assume the stock is nonmarketable. Prepare Indigo's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)
Sage Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Sage does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share.Prepare Sage's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the purchase of the investment enter a debit amount enter a credit amount enter an account title to record the purchase of the investment enter a debit amount enter a credit amount (b) enter an account title to record the dividends…
Adams Moving and Storage, a family-owned corporation, declared a property dividend of 800 shares of GE common stock that Adams had purchased in February for $24,000 as an investment. GE’s shares had a market value of $28 per share on the declaration date. Prepare the journal entries to record the property dividend on the declaration and payment dates and record adjustment of stock to fair value Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.