Answered: Jaycie Phelps Inc. acquired 20% of the…

Jaycie Phelps Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,200,000 for 50,000 shares. Kulikowski Inc.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $ 1,294,800 for 49,800 shares. Kulikowski Inc. declared and paid an $ 0.75 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $ 764,000 for 2021. The fair value of Kulikowski’s stock was $ 29 per share at December 31, 2021. (a) Prepare the journal entries for Bramble Inc. for 2020 and 2021, assuming that Bramble cannot exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (To record dividend.) (To record…
Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $ 1,294,800 for 49,800 shares. Kulikowski Inc. declared and paid an $ 0.75 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $ 764,000 for 2021. The fair value of Kulikowski’s stock was $ 29 per share at December 31, 2021. At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the total net income reported in 2021 under each of these methods? Fair Value Method Equity Method Investment amount (balance sheet) $ $ Dividend revenue (income statement) Unrealized holding gain (income statement) Investment income (income statement)
Novak Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,214,400 for 52,800 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $768,000 for 2021. The fair value of Kulikowski’s stock was $26 per share at December 31, 2021. Assume that the security is a trading security. At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the total net income reported in 2021 under each of these methods? Fair Value Method Equity Method Investment amount (balance sheet) $ $ Dividend revenue (income statement) Unrealized holding gain (income statement) Investment income (income statement)
Novak Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,214,400 for 52,800 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $768,000 for 2021. The fair value of Kulikowski’s stock was $26 per share at December 31, 2021. Assume that the security is a trading security. Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak cannot exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020June 30, 2021Dec. 31, 2021…
Novak Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,214,400 for 52,800 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $768,000 for 2021. The fair value of Kulikowski’s stock was $26 per share at December 31, 2021. Assume that the security is a trading security. Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak can exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020June 30, 2021Dec. 31, 2021…
Pronghorn Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,243,200 for 51,800 shares. Kulikowski Inc. declared and paid an $0.75 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $786,000 for 2021. The fair value of Kulikowski's stock was $27 per share at December 31, 2021.
Sarasota Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,097,800 for 49,900 shares. Kulikowski Inc. declared and paid an $0.85 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $769,000 for 2021. The fair value of Kulikowski’s stock was $25 per share at December 31, 2021. Assume that the security is a trading security. Prepare the journal entries for Sarasota Inc. for 2020 and 2021, assuming that Sarasota cannot exercise significant influence over Kulikowski. Date Account Titles and Explanation Debit Credit Dec. 31, 2020 June 30, 2021 Dec. 31, 2021 (To record dividend.) (To record fair value.) At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the…
Waterway Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,170,000 for 46,800 shares. Kulikowski Inc. declared and paid an $0.90 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $802,000 for 2021. The fair value of Kulikowski's stock was $28 per share at December 31, 2021. (a) Prepare the journal entries for Waterway Inc. for 2020 and 2021, assuming that Waterway cannot exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Jaycie Phelps Inc. acquired 25% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,200,000 for 50,000 shares. Kulikowski Inc. declared and paid an $0.85 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $730,000 for 2021. The fair value of Kulikowski's stock was $27 per share at December 31, 2021. Instructions: select the correct answer for each requirement. What is the amount of Equity Investments (Kulikowski) at December 30, 2021? What is the dividend revenue at December 31, 2021? What is the dividend revenue at June 30, 2021? What is the amount of Equity Investments (Kulikowski) at June 30, 2021? What is the amount of Unrealized Holding Gain or Loss- Income on December 31, 2021
Shamrock Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $ 1,245,600 for 51,900 shares. Kulikowski Inc. declared and paid an $ 0.85 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $ 699,000 for 2021. The fair value of Kulikowski’s stock was $ 27 per share at December 31, 2021.
On January 2, 2020, Black Company purchased 17% of Rock Company's common stock for $51,000. Rock's net income for the years ended December 31, 2020, and December 31, 2021, were $15,000 and $59,000, respectively. During 2020, Rock declared and paid a dividend of $67,500. On December 31, 2020, the fair value of the Rock stock owned by Black had increased to $69,000. How much should Black show in the 2020 income statement as income from this investment? Multiple Choice $29,475. There is no correct answer. $24,000. $11,475. $18,000. ME MacBook Air
On June 1, 2020, Ping Corp. purchased 10,000 of Pong's 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong's shares was P6.50 per share on December 31, 2020. Which statement is correct? O Assuming that the investment is FVTPL, the total effect on Ping's profit or loss for the year ended December 31, 2020 is P2,500 O Assuming that the investment is FVTOCI, the total effect on Ping's profit or loss for the year ended December 31, 2020 is P7,500. O Assuming that the investment is an associate, the total effect on Ping's profit or loss for the year ended December 31, 2020 is P3,600. O After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches.