General accounting Major bought 100% of Medium. On January 1, Year 1, for$8,000,000. Annual amortization of $40,000 resulted from thisacquisition. Medium reported a net income of $500,000 in Year1 and paid $100,000 in dividends. What is the Investment inMedium Co. balance on Major's books as of December 31, Year1, if the equity method has been applied?a. $8,000,000b. $8,460,000c. $8,400,000d. $8,360,000

The equity method is used when an investor has significant influence over the investee, often…

Answered: Major bought 100% of Medium. On January…

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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On December 30, Year 3, Varsity Corporation sold its investment in marketable equity securities costing $800,000 for $860,000 cash. The securities were purchased on January 2, Year 1, and the market value of the securities was $820,000 and $780,000 on December 31, Year 1 and Year 2, respectively. How much gain or loss will Varsity report in its income statement for the year ending December 31, Year 3? Multiple Choice A $40,000 gain. An $80,000 gain. A $20,000 loss. A $60,000 gain..
Stuart Corp. purchased $80,000 of Dumb Co. bonds and $120,000 of Silly Inc. bonds. Both investments are classified as trading. As of December 31, the Dumb Co. bonds are selling for $90,000 and the Silly Inc. bonds are selling for $140,000 per share. Stuart had net income of $150,000 before reporting the impact of investment transactions. Required: a. Record the December 31 adjusting entries for investments. b. What is Stuart Corp.'s net income after adjusting for investments? c. What is the appropriate balance sheet presentation for these investments?
Willard Co. acquired a 30% interest in Diltronics for $420,000 and appropriately applied the equity method. During the first year, Diltronics reported net income of $250,000 and paid cash dividends totaling $50,000. What amount will Willard report as it relates to the investment at the end of the first year on its income statement? Show the calculation used to get the answer Investment earnings totaling $75,000 Investment earnings totaling $45,000 Net investment earnings totaling $150,000 Receipt of dividends totaling $15,000
Pepito Company purchased 40% of the outstanding stock of Reyes Company on January 1. Reyes reported net income of $75,000 and declared dividends of $15,000 during the current year. How much would Pepito adjust its investment in Reyes Company under the equity method?
Scott Co. acquired a 30% interest in Roker, Inc. for $210,000 and appropriately applied the equity method. During the first year, Roker, Inc. reported net income of $125,000 and paid cash dividends totaling $25,000.What amount will Scott report as it relates to the investment at the end of the first year on its income statement? Select one: A. Investment earnings totaling $37,500 B. Investment earnings totaling $22,500 C. Receipt of dividends totaling $7,500 D. Net investment earnings totaling $75,000
On August 1 of the current year, Fleetwood Company purchased 5,000 , P1,000 , 12% bonds on Ritchie Company at 104 plus accrued interest . The bonds pay interest semiannually on May 1 and November 1. On December 1 of the current year, Fleetwood sold 2,000 of the bonds at 102 plus accrued interest. What is the gain or loss on sale of investment? indicate if gain or loss
Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1. Marco reported net income of $90,300 and declared dividends of $20,600 during the year. How much would Ramiro adjust its investment in Marco Company under the equity method? of $
On January 1 of the current year, Beta Company paid $200,000 for 10,000 shares of Gamma Company common stock. Beta owns 10% of Gamma Company. Gamma reported net income of $67,000 for December 31 of the current year. The fair value of the Gamma stock on that date was $28. What amount will be reported in Beta's balance sheet for the investment in Gamma at December 31? ○ A. $347,000 B. $267,000 C. $280,000 OD. $213,000
Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds for $104,500 plus $500 in accrued interest. The journal entry for the sale of the bonds would be debit Cash, $104,500, and Interest Receivable, $500; credit Investments-Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500 Odebit Cash, $105,000; credit Investments Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500 debit Cash, $105,000; credit Investments-Evans Company Bonds, $100,000, and Gain on Sale of Investments, $5,000 debit Cash, $105,000; credit Investments-Evans Company Bonds, $104,500, and Interest Revenue, $500
Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1. Marco reported net income of $90,000 and declared dividends of $17,100 during the year. How much would Ramiro adjust its investment in Marco Company under the equity method? would it increase or decrease
Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1. Marco reported net income of $76,000 and declared dividends of $17,800 during the year. How much would Ramiro adjust its investment in Marco Company under the equity method? of $fill in the blank 2

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