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.
Melville Inc. purchased 2,000 common shares (20%) of Raymore Ltd. on January 1, Year 5 for $42,000. Additional information on Raymore for the two years ending December 31, Year 6, is as follows: Year Net Income Dividends Paid Market Value per Share atend of period Year 5 $ 25,000 $ 13,000 $22.00 Year 6 28,000 14,000 22.60 At December 31, Year 6, Raymore had some inventory that was purchased from Melville. Melville had recorded a gross profit of $1,300 on the sale of this inventory. This gross profit should be deducted from Melville's Year 6 profit and investment account under the equity method. On January 1, Year 7, Melville sold its investment in Raymore for $47,000. Required: (a) Calculate the balance in the investment account at December 31, Year 6 under each of the cost and equity methods. (Omit $ sign in your response.) Investment account at end of Year 6 under cost method $ Investment account at end of Year 6 under equity method $…
On January 2, 20Y4, Destiny Company acquired 42% of the outstanding stock of Emerald Company for $350,000. For the year ended December 31, 20Y4 Destiny Company earned income of $200,000 and paid dividends of $25,000. On January 31, 20Y5, Destiny Company sold all of its investment in Emerald Company stock for $400,000. Journalize the entries for Destiny Company for the purchase of the stock, the share of Emerald income, the dividends received from Emerald Company, and the sale of the Emerald Company stock.
RR Company purchased 12,000 common shares of SS Inc. on January 1, Year 1 for $180,000. SS inc. had 80,000 common shares outstanding. The following information relates to SS Inc.: Net Income (loss) $300,000 $(180,000) Dividends paid Market value/share at December 31 $75,000 $40,000 Year 1 $17 $18 Year 2 On January 1, Year 3, RR sold Investment in SS Inc. shares for $20 per share. RR has a December 31 year end. Required: Show all calculations for full marks. i) Prepare the journal entries for Years I and 2 and on January 1, Year 3 assuming the RR elects to use FVOCI to account for its investment in SS ii) How much is the change in Retained Earnings from January 1, Year 1 to January 1, Year 3? Show all #s for each year to support your total change.
At the beginning of current year, Remington Company acquired 200,000 ordinary shares of Universal Company for P 9,000,000.At the time of purchase, Universal Company had outstanding 800,000 shares with a carrying amount of P 36,000,000.The following events took place during the current year:• Universal Company reported net income of P 1,800,000 for the current year.• Remington Company received from Universal Company a dividend of P 3.00 per ordinary share or P 600,000.• The market value of Universal Company share had temporarily declined to P 40.Remington Company has elected irrevocably to measure the investment at fair value through other comprehensive income. What is the carrying amount of the investment at year-end? * a. 9,000,000 b. 8,000,000 c. 9,300,000 d. 9,450,000
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
16. On January 1, 20x5, Paz acquired 80% of Shey outstanding ordinary shares for P950,000. Paz uses the cost method to record the investment account. The statement of financial position of Paz and Shey on December 31, 20x1 are as follows: Paz Shey Cash 2,500,000 1,000,000 Accounts Receivable 500,000 250,000 Inventory 800,000 200,000 Investment in Shey 950,000 - Land 2,000,000 - Building – net…
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…
On January 2, 20Y4, Whitworth Company acquired 37% of the outstanding stock of Aloof Company for $320,000. For the year ended December 31, 20Y4, Aloof Company earned income of $83,000 and paid dividends of $26,000. On January 31 20Y5, Whitworth Company sold all of its investment in Aloof Company stock for $338,090. Journalize the entries for Whitworth Company for the purchase of the stock, the share of Aloof income, the dividends received from Aloof Company, and the sale of the Aloof Company stock. If an amount box does not require an entry, leave it blank. Jan. 2, 20Y4 - Purchase - Select - - Select - - Select - - Select - Dec. 31, 20Y4 - Income - Select - - Select - - Select - - Select - Dec. 31, 20Y4 - Dividends - Select - - Select - - Select - - Select - Jan. 31, 20Y5 - Sale - Select - - Select - - Select - - Select - - Select - - Select -

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