11 Gant Company purchased 20 percent of the outstanding shares of Temp Company for $70,000 on January 1, 20X6. Thefollowing results are reported for Temp Company:Net incomeDividends paidFair value of shares held by Gant:January 1December 31Required:20X6$ 44,00020X7$ 39,00020X8$ 61,00011,00025,00016,00070,00089,00086,00089,00086,00097,000Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant'sinvestment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment inTemp:a. Carries the investment at fair value.b. Uses the equity method.

1. Investment at Fair ValueStep 1:Under this method, Gant recognizes changes in the fair value of…

Answered: Gant Company purchased 20 percent of…

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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Gant Company purchased 30 percent of the outstanding shares of Temp Company for $74,000 on January 1, 20X6. The following results are reported for Temp Company: 20X6 Net income $ 46,000 20X7 $ 41,000 Dividends paid 20X8 $ 53,000 12,000 29,000 17,000 Fair value of shares held by Gant: January 1 74,000 93,000 90,000 December 31 93,000 90,000 101,000 Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp: a. Carries the investment at fair value. b. Uses the equity method. Complete this question by entering your answers in the tabs below. Required A Required B Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the equity method in accounting for its investment…
Gant Company purchased 30 percent of the outstanding shares of Temp Company for $77,000 on January 1, 20X6. The following results are reported for Temp Company: 20X6 20X7 20X8 Net income $ 44,000 $ 39,000 $ 53,000 Dividends paid 11,000 26,000 16,000 Fair value of shares held by Gant: January 1 77,000 96,000 93,000 December 31 96,000 93,000 104,000 Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant’s investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp: Carries the investment at fair value. Uses the equity method.
Blush Company has the ability to exercise significant when the fair value of net assets was P20,000,000. outstanding ordinary shares of an investee for P4,000,000 On July 1, 2020 Blush Company purchased 20% of the influence over the operating and financial policies of the investee. The following data concerning the investee are available: 12 months ended December 31, 2020 December 31, 2020 6 months ended Net income Dividend declared and paid 3,000,000 1,900,000 1,600,000 1,000,000 in the income statement for the year ended December 31, o020, what amount of income should be reported from the investment?
Keswick Co acquired 80% of the share capital of Derwent Co on 1 June 20X5. The summarised draft statements of profit or loss for Keswick Co and Derwent Co for the year ended 31 May 20X6 are shown below: Keswick Co Derwent Co $000 8,400 (4,600) 3,800 (1,500) (700) $000 3,200 (1,700) 1,500 Revenue Cost of sales Gross profit Distribution costs (510) Administrative costs (450) Profit before tax 1,600 (600) 540 Тах (140) Profit of the year 1,000 400 During the year Keswick Co sold goods costing $1,000,000 to Derwent Co for $1,500,000. At 31 May 20X6, 30% of these goods remained in Derwent Co's inventory. Task 1 Use the information above to complete the following financial statement: Revenue Less: Cost of sales Gross profit Less: Distribution costs Administrative costs Profit before tax Less: Tax Profit for the year Attributable to: Equity owners of Keswick Co Non-controlling interest
Gant Company purchased 30 percent of the outstanding shares of Temp Company for $87,000 on January 1, 20X6. The following results are reported for Temp Company: Net income Dividends paid Fair value of shares held by Gant: January 1 December 31 a. Carries the investment at fair value. b. Uses the equity method. 20X6 $ 43,000 14,000 Income from investment Balance in investment S $ 87,000 106,000 Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp: Complete this question by entering your answers in the tabs below. 20X7 $ 38,000 28,000 20X6 106,000 103,000 20X7 (800) $ 39,400 95,700 $ 109,000 Answer is complete but not entirely correct. Required A Required B Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in…
Subject- accounting
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $283,500. Steal reported the following net income and dividend payments: Year Net Income Dividends Paid 20X7 $ 48,000 $ 28,000 20X8 58,000 38,000 20X9 33,000 13,000 On January 1, 20X7, Steal had $256,000 of $10 par value common stock outstanding and retained earnings of $156,000, and the fair value of the noncontrolling interest was $189,000. Steal held land with a book value of $26,500 and a market value of $34,000 and equipment with a book value of $338,000 and a market value of $378,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: Compute the increase in the fair value of patents held by Steal. Prepare the…
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Chur Company acquired a 40% interest in Flip company for 1,700,000 on January 1, 2020. The shareholders equity of FLip company on Janaury 1 and December 31, 2020 us presented below: January 1 December 31 Share capital 3,000,000 3,000,000 Revaluation surplus - 1,300,000 Retained earnings 1,000,000 1,500,000 On January 1, 2020 all the identifiable assets and liabilities of Flip company were recorded at fair value. Flip company reported profit before income tax of 1,000,000 and paid dividends of 150,000 to shareholders during the current year. The revaluation surplus is the result of the revaluation of land recognized by Flip company on December 31, 2020. Flip presents OCI net of applicable income tax. Additionally, depreciation is provided by Flip Company on the diminishing balance method whereas Chur company uses straight line. Had Flip company used…
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal reported the following net income and dividend payments: Dividends Paid Year Net Income 20X7 $ 45,000 $ 25,000 20X8 55,000 35,000 10,000 20X9 30,000 On January 1, 20X7, Steal had $250,000 of $6 par value common stock outstanding and retained earnings of $150,000, and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $23,500 and a market value of $31,000 and equipment with a book value of $335,000 and a market value of $375,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Steal. Increase in fair value
Plug Corporation holds 80 percent of Socket Company's common stock. The following balance sheet data are presented for December 31, 20X7: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Socket Company Total Assets Liabilities and Equities Accounts Payable Bonds Payable Preferred Stock ($100 par value) Common Stock ($10 par value) Retained Earnings Total Liabilities and Equities Plug Corporation $ 100,000 150,000 300,000 100,000 2,250,000 Basic earnings per share Diluted earnings per share (850,000) 600,000 $2,650,000 $ 200,000 800,000 1,000,000 650,000 $2,650,000 $ Socket Company 90,000 220,000 300,000 290,000 900,000 (250,000) $1,550,000 $ 100,000 500,000 200,000 400,000 350,000 $1,550,000 Socket reported net income of $115,000 in 20X7 and paid dividends of $60,000. Its bonds have an annual interest rate of 8 percent and are convertible into 30,000 common shares. Its preferred shares pay an 11 percent annual dividend…

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