Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Ayayai Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Sunland Company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for amounts.) (a) Fair Value Method (b) Equity Method Transaction Investment Account Dividend Revenue Investment Account Investment Revenue 1. At the beginning of Year 1, Ayayai bought 30% of Sunland's common stock at its book value. Total book value of all Sunland's common stock was $760,000 on this date. 2. (a) During Year 1, Sunland reported $52,000 of net income. (b) During Year 1, Sunland paid $28,500 of dividends. 3. (a) During Year 2, Sunland reported $26,000 of net income. (b) During Year 2, Sunland paid $21,000 of dividends. 4. (a) During Year 3, Sunland reported a net loss of $9,000. (b) During Year 3, Sunland paid $4,200 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.
Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Ayayai Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Sunland Company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for amounts.) (a) Fair Value Method (b) Equity Method Transaction Investment Account Dividend Revenue Investment Account Investment Revenue 1. At the beginning of Year 1, Ayayai bought 30% of Sunland's common stock at its book value. Total book value of all Sunland's common stock was $760,000 on this date. 2. (a) During Year 1, Sunland reported $52,000 of net income. (b) During Year 1, Sunland paid $28,500 of dividends. 3. (a) During Year 2, Sunland reported $26,000 of net income. (b) During Year 2, Sunland paid $21,000 of dividends. 4. (a) During Year 3, Sunland reported a net loss of $9,000. (b) During Year 3, Sunland paid $4,200 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Ayayai Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Sunland Company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for amounts.)
| (a) Fair Value Method | (b) Equity Method | |||||||||
| Transaction | Investment Account | Dividend Revenue | Investment Account | Investment Revenue | ||||||
| 1. | At the beginning of Year 1, Ayayai bought 30% of Sunland's common stock at its book value. Total book value of all Sunland's common stock was $760,000 on this date. | |||||||||
| 2. | (a) During Year 1, Sunland reported $52,000 of net income. | |||||||||
| (b) During Year 1, Sunland paid $28,500 of dividends. | ||||||||||
| 3. | (a) During Year 2, Sunland reported $26,000 of net income. | |||||||||
| (b) During Year 2, Sunland paid $21,000 of dividends. | ||||||||||
| 4. | (a) During Year 3, Sunland reported a net loss of $9,000. | |||||||||
| (b) During Year 3, Sunland paid $4,200 of dividends. | ||||||||||
| 5. | Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue. |
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