During 2023, Elisabeth Ltd. purchased 8,000 shares of Lilly of the Valley Corp. for $34 per share ($272,000 total). Elisabeth held these shares untilSeptember 2025, when it sold them for $42 per share. During these three years, Lilly of the Valley paid dividends of $2 per share on July 31. OnElisabeth's fiscal year-end (December 31), shares of Lilly of the Valley closed at $39, $30, and $46 in 2023, 2024, and 2025, respectively.RequiredAssume that the company designated half of the Lilly of the Valley shares as FVPL and the other half irrevocably elected to record fair value changesthrough OCI. Determine the amounts to be reported on Elisabeth's balance sheet and statement of comprehensive income with respect tothe company's investment in Lilly of the Valley Corp. What do you observe about the total amount of retained earnings for the three years combined?Complete the analysis for 2024.Balance sheetFinancial assetEquity: AOCI on Lilly of the Valley shares*Retained earnings due to gains or losses (cumulative)Retained earnings from dividend income (cumulative)Statement of comprehensive incomeDividend incomeGains (losses) recognized through incomeGains (losses) recognized through OCI

Financial Assets -Investment assets that derive their worth from a contractual claim of what they…

Answered: During 2023, Elisabeth Ltd. purchased…

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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On January 1, 2020, Pharoah Corporation purchased 40% of the common shares of Novak Company for $201,000. During the year, Novak earned net income of $77,000 and paid dividends of $19,250.Prepare the entries for Pharoah to record the purchase and any additional entries related to this investment in Novak Company in 2020. (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.) Account Titles and Explanation Debit Credit (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.)
On January 1, 2025, Ayayai Corporation purchased 40% of the common shares of Pina Company for $178,000. During the year, Pina earned net income of $86,000 and paid dividends of $21,500. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina Company in 2025. (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 (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.) Debit Credit ION
Miller Corporation acquired 30% of the outstanding common stock of Crowell Corporation for $170,000 on January 1, 2018, and obtained significant influence. The purchase price of the shares was equal to their book value. During 2018, the following information is available for Crowell: Mar. 31 Declared and paid a cash dividend of $50,000. June 30 Reported semiannual earnings of $120,000 for the first half of 2018. Sept. 30 Declared and paid a cash dividend of $50,000. Dec. 31 Reported semiannual earnings of $140,000 for the second half of 2018. Required: 1. Prepare journal entries for Miller to reflect the preceding information. 2. What is the balance in Miller’s investment account on December 31, 2018?
Godo
The following are two independent situations.Situation 1Sandhill Cosmetics acquired 10% of the 196,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2020. On June 30, Martinez declared and paid $69,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $116,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.Situation 2Teal, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 31,000 outstanding shares of common stock at a total cost of $8 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $38,400 to all stockholders. On December 31, Seles reported a net income of $92,500 for the year.Prepare all necessary journal entries in 2020 for both situations. (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…
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 are two independent situations.Situation 1Metlock Cosmetics acquired 10% of the 191,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2020. On June 30, Martinez declared and paid $80,900 cash dividend to all stockholders. On December 31, Martinez reported net income of $121,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share.Situation 2Bonita, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 29,700 outstanding shares of common stock at a total cost of $10 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $33,000 to all stockholders. On December 31, Seles reported a net income of $79,200 for the year.Prepare all necessary journal entries in 2020 for both situations. (
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Ivanhoe Corporation owned 20000 shares of Flint Corporation's $5 par value common stock. These shares were purchased in 2022 for $223000. On September 15, 2026, Ivanhoe declared a property dividend of one share of Flint for every ten shares of Ivanhoe held by a stockholder. On that date, when the market price of Flint was $30 per share, there were 180000 shares of Ivanhoe outstanding. What NET reduction in retained earnings would result from this property dividend? O $200700 O $540000 O $211850 O $339300
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On January 4, 20Y4, Ferguson Company purchased 480,000 shares of Silva Company’s common stock directly from one of the founders for a price of $30 per share. Silva has 1,200,000 shares outstanding, including the Daniels shares. On July 2, 20Y4, Silva paid $750,000 in total dividends to its shareholders. On December 31, 20Y4, Silva reported a net income of $2,000,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. Required: a. Journalize the Ferguson Company entries for the transactions involving its investment in Silva Company during 20Y4. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. Determine the December 31, 20Y4, balance of the investment in Silva Company stock account. CHART OF ACCOUNTS…
The following are two independent situations.Situation 1Cheyenne Cosmetics acquired 10% of the 191,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2020. On June 30, Martinez declared and paid $80,900 cash dividend to all stockholders. On December 31, Martinez reported net income of $121,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share.Situation 2Ayayai, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 29,700 outstanding shares of common stock at a total cost of $10 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $33,000 to all stockholders. On December 31, Seles reported a net income of $79,200 for the year.Prepare all necessary journal entries in 2020 for both situations.

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