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Investment in Buffalo st $3,230.000 12/6/18 Dividend received $160,000 Share of income 380,000 12/5/19 Dividend received 250,000 Share of income 490,000

Investment in Buffalo st $3,230.000 12/6/18 Dividend received $160,000 Share of income 380,000 12/5/19 Dividend received 250,000 Share of income 490,000

FINANCIAL ACCOUNTING
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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Flint Corp. was a 30% owner of Buffalo Company, holding 216,000 shares of Buffald's common stock on December 31, 2019. The investment account had the following entries. Investment in Buffalo 1/1/18 Cost $3.230,000 12/6/18 Dividend received $160,000 380,000 12/5/19 Dividend received 12/31/18 Share of income 250,000 12/31/19 Share of income 490,000 On January 2, 2020, Flint sold 108,000 shares of Buffalo for $3,470,000, thereby losing its significant influence. During the year 2020, Buffalo experienced the following results of operations and paid the following dividends to Flint. Buffalo Dividends Paid Income (Loss) to Flint 2020 $320,000 $52,000 At December 31. 2020, the fair value of Butffalo shares held by Flint is $1.980,000. This is the first reporting date since the January 2 sale (b) Compute the carrying amount of the investment in Buffalo as of December 31. 2020 (prior to any tair value adjustment). Carrying amount 1839000 (c) Prepare the adjusting entry on December 31, 2020, applying the fair value method to Flint's long-term investment in Buffalo Company securities (Credit occount titles are outomatically indented when amount is entered, Do not indent manuolly no entry srequirnd, select "No Entry for the account titles and enter Ofor the omounts) Date Account Titles and Explanation Debit Credit Dec 31, 2020 FarValue Adiusment 72000
Transcribed Image Text:Flint Corp. was a 30% owner of Buffalo Company, holding 216,000 shares of Buffald's common stock on December 31, 2019. The investment account had the following entries. Investment in Buffalo 1/1/18 Cost $3.230,000 12/6/18 Dividend received $160,000 380,000 12/5/19 Dividend received 12/31/18 Share of income 250,000 12/31/19 Share of income 490,000 On January 2, 2020, Flint sold 108,000 shares of Buffalo for $3,470,000, thereby losing its significant influence. During the year 2020, Buffalo experienced the following results of operations and paid the following dividends to Flint. Buffalo Dividends Paid Income (Loss) to Flint 2020 $320,000 $52,000 At December 31. 2020, the fair value of Butffalo shares held by Flint is $1.980,000. This is the first reporting date since the January 2 sale (b) Compute the carrying amount of the investment in Buffalo as of December 31. 2020 (prior to any tair value adjustment). Carrying amount 1839000 (c) Prepare the adjusting entry on December 31, 2020, applying the fair value method to Flint's long-term investment in Buffalo Company securities (Credit occount titles are outomatically indented when amount is entered, Do not indent manuolly no entry srequirnd, select "No Entry for the account titles and enter Ofor the omounts) Date Account Titles and Explanation Debit Credit Dec 31, 2020 FarValue Adiusment 72000
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