DEF purchased 15,000 shares in KMH Co on 1 August 20X6 at a cost of $6.50 each. Transaction costs on the purchase amounted to $1,500. At the year-end 30 September 20X6, these shares are now worth $7.75 each. What is the gain to be recognised and where it will be recorded according to two cases: (1) Shares held for sales (2) Shares held to collect contractual cash flows and sell them. Select the correct gain and the place it will be recorded.

DEF purchased 15,000 shares in KMH Co on 1 August 20X6 at a cost of $6.50 each. Transaction costs on the purchase amounted to $1,500. At the year-end 30 September 20X6, these shares are now worth $7.75 each. What is the gain to be recognised and where it will be recorded according to two cases: (1) Shares held for sales (2) Shares held to collect contractual cash flows and sell them. Select the correct gain and the place it will be recorded.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Ayayai Corporation purchased 420 shares of Sherman Inc. common stock for $12,300 (Ayayai does not…

A: FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOMEFair value through Other Comprehensive Income (FVOCI)…

Q: Riverbed Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Riverbed does…

A: Accounting for investment is done to know the impact of investment income or expenditure on overall…

Q: a) Determine the amount of each distribution that is from current E&P, accumulated E&P, Return of…

A: SOLUTION;- JANUARY 01- IMAGINE NATION CORPORATION HAD ACCUMULATED EARNING&PROFITS - 50000$…

Q: Eagle Exporters purchased 80,000 of the 200,000 outstanding shares of Giant Distributors for…

A: The objective of the question is to calculate the year-end balance in the Investment in Giant…

Q: At a total cost of $6,700,000, Herrera Corporation acquired 238,000 shares of Tran Corp. common…

A: The question is based on the concept of Financial Accounting.

Q: Rudolph, Inc. owns 15% of the common stock of Red Nose Corporation and used the fair value method to…

A: Net income, also known as net profit or earnings, is a crucial fiscal standard that represents…

Q: On January 2, Todd Company acquired 40% of the outstanding stock of McGuire Company for $205,000.…

A: The journal entries are the basic method for recording transactions. The portion of shares acquired…

Q: Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment…

A: Below are the effects of the transactions by using equity method or fair value method:

Q: Segmental Manufacturing owns 35% of Glesson Corporation stock. Glesson pays a total of $47,000 in…

A: Introduction:-. Journal entry used to record business transactions. Dividend income means any…

Q: Dristell Incorporated had the following activities during the year (all transactions are for cash…

A: The investing activities section of the cash flow statement includes cash flows from non-current…

Q: A. Gympa reported on its income statement a net income $647,000 for the year ended December 31…

A: Note: Since you have asked multiple question, we will solve the first question for you. If you want…

Q: Swifty Corporation purchased a 20% interest in Moss Inc. for $280. This investment gave Swifty…

A: Accounting journal entries are used to document accounting transactions in a company's accounting…

Q: Willard Co. acquired a 30% interest in Diltronics for $420,000 and appropriately applied the equity…

A: Answer:- Income statement meaning:- Income statement is one of the most important financial…

Q: Ella Ltd purchased 20% of the shares of Monica Ltd on 1 January 20X2. This purchase resulted in Ella…

A: Solution: JOURNAL ENTRIES a) Using Equity Method Date…

Q: Bellows Inc. purchased 10,000 shares of Nesbitt Inc.’s common stock for $7.50 per share. Nesbitt…

A: Investment represents the amount paid in orde to earn something in return. Investment in share…

Q: The following are two independent situations. Situation 1 Metlock Cosmetics acquired 10% of the…

A: Date Particular Debit Credit Situation 1: Metlock Cosmetics Mar 18 Available for sale…

Q: On January 1 Kwun Corporation purchased a 20% equity in Connors Corporation for $180,000. At…

Q: (TCO A) Bend Inc. holds 25% of the outstanding voting shares of Calico Co. and appropriately applies…

A: Intra entity profit refers to the profit received from an intra entity transaction.

Q: Mozart Co. owns 35% of Melody Inc. Melody pays $50,000 in cash dividends to its shareholders for the…

A: Dividend: It can be defined as the distribution of the residual earnings of the company to its…

Question

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

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
Brave Industries owned investment securities with a book value of $20 million on August 12. At that time, Brave's board of directors declared a property dividend consisting of these securities. The fair value of the securities was as follows: Declaration --- August 12 Date of record --- September 1 Distribution date --- September 20 By how much is total stockholder' equity reduced by the property dividend? $31 million $30 million $27 million $20 million $28 million 30 million 31 million
The securities owned by Jane Company were held as a long-term investment. During the currentyear, the following transactions occurred:Jan. 1 Purchased 15,000 shares of ABC Company at P70 per share.May 1 Purchased 8,000 shares of XYZ Corporation for P660,000.Apr 1 Received a cash dividend of P6 per share from ABC Company.July 1 Received a share for a share dividend from XYZ Corporation.Aug 1 Purchased 10,000 shares of GHI Enterprises at P75 each.Oct 1 Received a cash dividend of P6 per share from ABC Company.Oct 31 XYZ Corporation offered shareholders rights to subscribe to one new share for every tenrights tendered at P25. At the time of issuance, the market value of the right is P4. Sharerights are not accounted for separately.Nov 15 Exercised the XYZ Corporation’s share rights.Dec. 1 Sold 10,000 shares of XYZ Corporation at P35 per share. Use the FIFO approach indetermining the cost of the shares sold.Dec. 31 The fair values of the portfolio is as follows:ABC Company – P73 per…
At the beginning of the year, the Carolyn Brewery of Melbourne, Australia purchased a 25 percent ownership interest in Amber Pub of Brisbane, Australia. The investment cost $12 million. At year- end, Amber Pub declared and paid cash dividends to shareholders totaling $320,000, after reporting earnings of $2.0 million. A. Calculate the income statement effect of Carolyn's investment in Amber Pub as of year-end. B. Calculate the book value of Carolyn's equity investment in Amber Pub at year-end. C. Calculate the book value of Carolyn's equity investment in Amber Pub at year-end assuming that Down Under reported a loss of $1.2 million instead of a profit of $2.0 million and still paid vidend $320,000.
Delaney Company sells, for $280,000, a 40% of the shares it owns in Hunter Company. The carrying value of the Equity Investment relating to these shares is $240,000 on the date of sale. The journal entry to record the sale assuming Delaney keeps control over Hunter includes: Select one: A. Equity investment, debit, $240,000 B. Gain, credit, $40,000 C. APIC, credit, $40,000 D. Equity investment, credit, $280,000
Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Concord's journal entries related to this investment. (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.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the net income.) (To record the dividend.)
Mozart Co. owns 35% of Melody Inc. Melody pays $50,000 in cash dividends to its shareholders for the period. Mozart's entry to record the Melody dividend includes a? O Debit to Cash for $50,000 O Credit to Cash for $17,500 Credit to Investment Revenue for $50,000 O Credit to Equity Method Investments for $17,500
Dristell Incorporated had the following activities during the year (all transactions are for cash unless stated otherwise): a. A building with a book value of $419,000 was sold for $519,000. b. Additional common stock was issued for $179,000. c. Dristell purchased its own common stock as treasury stock at a cost of $84,500. d. Land was acquired by issuing a 6%, 10-year, $769,000 note payable to the seller. e. A dividend of $59,000 was paid to shareholders. f. An investment in Fleet Corporation's common stock was made for $139,000. g. New equipment was purchased for $74,500. h. A $99,500 note payable issued three years ago was paid in full. i. A loan for $119,000 was made to one of Dristell's suppliers. The supplier plans to repay Dristell this amount plus 10% interest within 18 months. Required: Calculate net cash flows from financing activities. (Cash outflows should be indicated with a minus sign.) DRISTELL INCORPORATED Statement of Cash Flows (partial) For the Year Ended December…
West Asset Management Inc. purchased a stock at $78.26 per share at the beginning of the year and held the stock for one year. At the end of the year, West Asset Management sold all of its holdings for this stock at $83.26 per share and received a dividend of $4.25 per share. What was West Asset Management’s total investment return for this stock in the holding period? A. 6.39% B. 15.64% C. 11.82% D. 5.43%
ABC Financial Services Inc. invested $15,000 to acquire 3,750 shares of EDFInvestments Inc. on March 15, 2012. This investment represents less thun 20% of the investee's voting stock. On May 7, 2016, ABC Financial Services Inc. sells 1,950 shares for $11,050. Which of the following will be the correct journal entry for this transaction?Introduction to Fir29:01 Finlnswer SheetA. Cash$ 11,050 Loss on Disposal$ 3,950Investments$ 15,000B. Cash$ 11,050Investment$ 7,800Gain on Disposal$ 3,250C. Cash$ 11,050Investments$ 11,050D. Gain on Disposal$ 11,050Investments$ 11,050