Gant Company purchased 30 percent of the outstanding shares of Temp Company for $74,000 on January 1, 20X6. The followingresults are reported for Temp Company:20X6Net income$ 46,00020X7$ 41,000Dividends paid20X8$ 53,00012,00029,00017,000Fair value of shares held by Gant:January 174,00093,00090,000December 3193,00090,000101,000Required:Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment inTemp 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 BDetermine 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 equity method in accounting for its investment inTemp.20X620X720X8Income from investment$13,800 $ 12,300 $15,900Balance in investment$84,200

Under the equity method, the investor recognizes its share of the earnings and losses of the…

Answered: Gant Company purchased 30 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 $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.
At the beginning of the current year, Remington Company acquired 200,000 ordinary shares of Universal Company for P9,000,000.At the time of purchase, Universal Company had outstanding 800,000 shares with carrying amount of P36,000,000.The following events took place during the current year:- Universal Company reported net income of P1,800,000 for the current year- Remingtong Company received from Universal Company a dividend of P3.00 per ordinary share or P600,000.- The market value of Universal Company share had temporarily declined to P40. Assuming the investment is a FA@FVPL. 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
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
On January 1, 20x2, Pfieter Company purchased 80 percent of the outstanding shares of Sedrosky Company at acost of P1,080,000. On that date, Sedrosky Company had P600,000 worth of ordinary shares and P750,000 worth ofaccumulated profits.For 20x2, Sedrosky Company reported income of P270,000 and paid dividends of P90,000. All of the assets andliabilities of Sedrosky Company are at fair market value.On December 31, 20x2, Pfieter Company sold equipment to Sedrosky Company for P112,500 that had a cost ofP67,500. The equipment is expected to have a useful life of 10 years from this date.For the year 20x2, Pfieter Company reported income from its own operations in the amount of P300,000, whichincluded the gain of P45,000 on equipment sold to Sedrosky Company. Requirement: c. Non-controlling Interest in Net Income of Subsidiary for 20x2.d. Non-controlling Interest in Net Assets of Subsidiary as of December 31, 20x2.
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 $…
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…
On July 1, 20x6 TRUST Company purchased 80% of the outstanding shares of DUREX Company at a cost of Pl,600,000. on that date, DUREX had P1,000,000 of capital stock and P1,400,0a00 of retained earnings. For 20x6, TRUST had income of P560,000 from its separate operations and paid dividends of P300,000. For 20x6, DUREX reported income of P130,000 and paid dividends of P60,000. All the assets and liabilities of DUREX have book values equal to their respective fair market values. Assume income was earned evenly throughout the year except for the intercompany transaction on October 1. On October 1, TRUST purchased an equipment from DUREX for P200,000. The book value of the equipment on that date was P240,000. The loss of P40,000 is reflected in the income of DUREX indicated above. The equipment is expected to have a useful life of 5 years from the date of sale. In the December 31, 20x6 consolidated statement of financial position, how much is the consolidated net income attributable to the…
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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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
15. 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…
On January 2, Matthews Corporation acquired 20% of the outstanding common stock of Dennehy Company for $450,000. For the year ended December 31, Dennehy reported net income of $90,000 and paid cash dividends of $30,000 on its common stock. On December 31, the carrying value of Matthews' investment in Dennehy under the equity method is O $450,000. O $456,000. O $444,000. O $462,000. eTextbook and Media Save for Later Attempts: 0 of 2 used Submit Answer

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