Financial 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

Step 1:The company implied the equity method. As per the equity method, the original investment is…

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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General accounting
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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?
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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
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Kross Company purchases an equity investment in Penno Company at a purchase price of $2.5 million, representing 40% of the book value of Penno. During the current year, Penno reports net income of $300,000 and pays cash dividends of $100,000. At the end of the year, the fair value of Kross’s invest- ment is $2.65 million. What amount of income does Kross report relating to this investment in Penno for the year? Explain.
Ayayai Corporation purchased a 20% interest in Moss Inc. for $300. This investment gave Ayayai significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss’s net carrying amount when it was acquired.Prepare Ayayai’s journal entries related to this investment using the equity method. Ayayai applies IFRS. (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.) Account Titles and Explanation Debit Credit enter an account title to record investment purchase enter a debit amount enter a credit amount enter an account title to record investment purchase enter a debit amount enter a credit amount (To record investment purchase) enter an account title to record investment income enter a debit amount enter a credit…
Marigold Corporation purchased 420 shares of Nolan Inc. common stock for $14,200 (Marigold does not have significant influence). During the year, Nolan paid a cash dividend of $3.25 per share. At year-end, Nolan stock was selling for $35.00 per share. (a) Prepare Marigold's journal entry to record the purchase of the investment. (List all debit entries before credit entries. 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 O for the amounts.) Account Titles and Explanation Debit Credit
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