Fizzy Inc. acquired 25% of the stock of Bubbly Inc. at the beginning of 2022 for $5,000,000, and reports the investment using the equity method. There is no basis difference, and no intercompany transactions. Bubb ly's retained earnings increased by $800,000 in the two years since acquisition, and its AOCI increased by $20,000. Bubbly declared and paid dividends of $300,000 during this time. What amount does Fizzy report for its investment in Bubbly at the end of 2022? O a. 5,205,000 Ob.5.130,000 O c. 5,125,000 O d.5,200,00

Fizzy Inc. acquired 25% of the stock of Bubbly Inc. at the beginning of 2022 for $5,000,000, and reports the investment using the equity method. There is no basis difference, and no intercompany transactions. Bubb ly's retained earnings increased by $800,000 in the two years since acquisition, and its AOCI increased by $20,000. Bubbly declared and paid dividends of $300,000 during this time. What amount does Fizzy report for its investment in Bubbly at the end of 2022? O a. 5,205,000 Ob.5.130,000 O c. 5,125,000 O d.5,200,00

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: Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2020, for $599,000…

A: As per the Honor code of Bartleby we are bound to given the answer of first three sub part only,…

Q: On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of…

A: A journal entry is used to record day-to-day transactions of the business by debiting and crediting…

Q: On January 1, 2027, Kasson Company acquired 40% of IJK Company's common stock for $183,000. Kasson…

A: IJK, is a public company which has its share available for retail investing. Therefore Kasson…

Q: On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common…

A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Q: Pharoah Co. acquired 25% of the 530,000 shares of outstanding common stock of Bloom Inc. on December…

A: Journal entryThe transactions that a company goes through in its day-to-day activities are recorded…

Q: On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration…

A: A consolidated balance sheet is a single balance sheet that provide the financial position of the…

Q: On January 1, 2024, Sledge had common stock of $130,000 and retained earnings of $270,000. During…

A: The objective of the question is to prepare the consolidation worksheet entries for Percy, Inc. and…

Q: On July 1, 2023, Jerry Corporation acquired 25% of the shares of Von, Inc. for P1,000,000. At that…

A: Note: Since you have posted a question with multiple sub-parts, we will solve first three subparts…

Q: On January 1, 2XX0, Waterfall Inc. acquired a 10% interest in Junior Corp. On January 1, 2XX1,…

A: Investment in associates refers to the type of investment that the firm makes in another company…

Q: Vikrambhai

A: To consolidate Sledge and Percy as of December 31, 2024, and compute the net income attributable to…

Q: BuyCo, Inc., holds 24 percent of the outstanding shares of Marqueen Company and appropriately…

A: Equity investee means any Person in which the company or any subsidiary holds an ownership interest…

Q: Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2017, for $574,000…

A: Consolidation refers to adding up financial figures of two or more separate entities in systematic…

Q: What is the balance of the Investment in Schedule account on Planner's balance sheet at December 31,…

A: Under the equity method of recording the investment is that;First of all the percentage of…

Q: Presented below are two independent situations: (a) Sandhill Inc. acquired 10% of the 420,000…

A: Whenever a company invests in another company and as a result, obtains significant influence in the…

Q: Old Enterprises Inc. acquired 10% of the 100,000 outstanding common shares of New Ltd. on January 1,…

A: Journal entries are made to record the transactions as the first process in the books of accounts…

Q: On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker…

A: a.

Q: On July 1, 2016, Killearn Company acquired 80,000 of the outstanding shares of Shaun Company for $12…

A: Formulas for the above table:

Q: Webster Corporation acquired 25% of the outstanding common stock of Digest Inc. on January 1, 2022.…

A: All equity investment is to be accounted at Fair value except in specific circumstances when entity…

Q: Presented below are two independent situations: (a) (b) Sheridan Inc. acquired 10% of the 417,000…

A: Journal entries are the transactions which are reported in the books of accounts primarily. It is…

Q: On July 1, 2018, Tremen Corporation acquired 40% of the shares of Delany Company. Tremen paid…

A: Investment is the amount which is put into some assets or securities to gain some returns in future.…

Q: Aurum Services, Inc. acquired 100,000 shares of Gamma Metals, Inc. on January 1, 2017. Gamma pays a…

A: Aurum services acquired 100000 shares on gamma metals and receive a cash dividend from gamma…

Q: On January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to…

A: GIVEN On January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash.…

Q: Matthew, Incorporated, owns 30 percent of the outstanding stock of Lindman Company and has the…

A: To solve the problem related to Matthew, Incorporated's investment in Lindman Company, we will use…

Q: Prepare all of Spark's journal entries for 2024 to apply the equity method to this investment.

A: When the ownership percentage in other company is between 20% to 50%, then equity method of…

Q: On January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to…

A: GIVEN On January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash.…

Question

Fizzy Inc. acquired 25% of the stock of Bubbly Inc. at the beginning of 2022 for $5,000,000, and reports the
investment using the equity method. There is no basis difference, and no intercompany transactions. Bubb
ly's retained earnings increased by $800,000 in the two years since acquisition, and its AOCI increased by
$20,000. Bubbly declared and paid dividends of $300,000 during this time. What amount does Fizzy report
for its investment in Bubbly at the end of 2022?
O a. 5,205,000
Ob.5,130,000
O c. 5,125,000
O d. 5,200,00

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: Equity Method

VIEW

Step 2: Solution

VIEW

Step 3: Working Notes:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On January 1, 2023, Payne Company bought a 15 percent interest in Scout Company. The acquisition price of $225,500 reflected an assessment that all of Scout’s accounts were fairly valued within the company’s accounting records. During 2023, Scout reported net income of $121,900 and declared cash dividends of $36,200. Payne possessed the ability to significantly influence Scout’s operations and, therefore, accounted for this investment using the equity method. On January 1, 2024, Payne acquired an additional 80 percent interest in Scout and provided the following fair-value assessments of Scout’s ownership components: Consideration transferred by Payne for 80% interest $ 1,454,400 Fair value of Payne's 15% previous ownership 272,700 Noncontrolling interest's 5% fair value 90,900 Total acquisition-date fair value for Scout Company $ 1,818,000 Also, as of January 1, 2024, Payne assessed a $435,000 value to an unrecorded database internally developed by Scout. The database is…
On January 1, 2022, Oriole Corp. bought 28,000 shares of the available 100,000 common shares of Iceberg Inc., a publicly traded firm. This acquisition provided Oriole with significant influence. Oriole paid $722,000 cash for the investment. At the time of the acquisition, Iceberg reported assets of $2,493,000 and liabilities of $1,192,000. Asset values reflected fair market value, except for capital assets that had a net book value of $505,000 and a fair market value of $753,000. These assets had a remaining useful life of five years. For 2022 Iceberg reported net income of $390,000 and paid total cash dividends of $100,000. On May 16, 2023, Oriole sold 14,000 of its shares in Iceberg for $425,000. Oriole has no immediate plans to sell its remaining investment in Iceberg. Iceberg is actively traded, and stock price information follows: January 1, 2022 $29 December 31, 2022 $31 January 1, 2023 $32 (a) Assuming Oriole is using the equity method under ASPE. did the initial investment…
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
Please help me
Turner Company owns 10% of the outstanding shares of ICA Company. Turner has a choice to measure this investment (a) at fair value through profit or loss, (b) at fair value through other comprehensive income, or (c) using the equity method. During the current year, ICA paid a $5 million cash dividend on its shares. What effect did this dividend have on Turner's 2022 financial statements under each of the above bases of measurement? Explain the reasoning for this effect.
BuyCo, Inc. holds 25 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $10,000 per year. For 2017, Marqueen reported earnings of $100,000 and declares cash dividends of $30,000. During that year, Marqueen acquired inventory for $50,000, which it then sold to BuyCo for $80,000. At the end of 2017, BuyCo continued to hold merchandise with a transfer price of $32,000.a. What Equity in Investee Income should BuyCo report for 2017?b. How will the intra-entity transfer affect BuyCo’s reporting in 2018?c. If BuyCo had sold the inventory to Marqueen, how would the answers to (a) and (b) have changed?
Parent acquires 80% of Sub for $170,000 on December 31, 2014. In 2015 Sub has net income of $140,000 and paid dividends of $70.000. Amortization of excess fair value over book value for the year was $43,750. What is the Investment in Sub account balance as of December 31, 2015.
Munabhai
On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $20 per share. Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Marshall Company Book Value Tucker Company Book Value Cash $ 60,000 $ 20,000 Receivables 270,000 90,000 Inventory 360,000 140,000 Land…
Gadubhai
On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Note: Parentheses indicate a credit balance. Multiple Choice O $1,760 In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. Compute the amount of…