Judd, Inc. owns 35% of Crosby Corporation. During the calendar year 2025, Crosby had net earnings of $300,000 and paid dividendsof $30,000. Judd mistakenly recorded these transactions using the fair value method rather than the equity method of accounting.What effect would this have on the investment account, net income, and retained earnings, respectively?O Understate, overstate, overstateO Overstate, understate, understateO Overstate, overstate, overstateO Understate, understate, understate

Note : If an investor owns more than 30% of corporation, Investor has to record these transactions…

Answered: Judd, Inc. owns 35% of Crosby…

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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13. In 2023, a corporation sells its business in an arm's length transaction for proceeds equal to FMV. At the time of the sale the business has accounts receivable of $123,000. The corporate vendor of the business and the purchaser agree that the realizable value of the receivables is $118,500. In 2022, the vendor had deducted a reserve for doubtful debts of $6,800. Which of the following statements is correct? A. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $2,300. B. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $6,800 and an allowable capital loss of $2,250. C. If a joint election is filed under ITA 22, the vendor will have a business deduction of $2,300. D. If a joint election is filed under ITA 22, the vendor will have a business deduction of $4,500. 14. During the current year, Denos Corporation incurred costs of $45,000 for leasehold improvements to its newly rented…
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Cheyenne Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Cheyenne purchased 130 common shares of AFS Corporation on July 1, 2023 at a price of $3 per share. Due to the nature of the investment, Cheyenne's management is accounting for the equity investment using the fair-value through other comprehensive income (FV-OCI) without recycling to net income. On August 1, 2023, AFS declared dividends of $2/share, and paid those dividends on August 20, 2023. On December 31, 2023, shares in AFS were trading at $5 per share. On September 15, 2024, Cheyenne sold the shares in AFS for $6 per share. Prepare the journal entries required to record the above transactions on the books of Cheyenne Ltd. (Credit account titles are automatically indented when the 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. List all debit…
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Metlock, Inc. has an investment in trading securities of $155000. This investment experienced an unrealized loss of $8500 during the current year. Assuming a 34% tax rate, the amount of this loss that would reported as part of other comprehensive income would be: None. $52700 loss. $102300 loss. $155000 loss.
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