On December 1, 2020, Citrus purchased 200,000 shares representing 45 percent of the outstanding stock of Berry for cash of P2,500,00O. As a resul this purchase, Citrus has the ability to exercise significant influence over the operating and financial policies of Berry. 45 percent of the profit of Berry amounted to P20,000 for the month of December and P350,000 for the year ended December 31, 2020. On January 15, 2021, cash dividends of PO.30 p share were paid to shareholders of record on December 31, 2020. Citrus'

On December 1, 2020, Citrus purchased 200,000 shares representing 45 percent of the outstanding stock of Berry for cash of P2,500,00O. As a resul this purchase, Citrus has the ability to exercise significant influence over the operating and financial policies of Berry. 45 percent of the profit of Berry amounted to P20,000 for the month of December and P350,000 for the year ended December 31, 2020. On January 15, 2021, cash dividends of PO.30 p share were paid to shareholders of record on December 31, 2020. Citrus'

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 May 1, 2020, Clarke Inc. acquired 1,250 shares of Mayson Ltd. for $75,000. This investment represents a 16% interest in Mayson Ltd. and Clark Inc. has significant influence. On December 31, 2020, Mayon Ltd. paid a $35,000 dividend to its shareholders. At April 30, 2021 Mayson Ltd.'s shares were valued at $30 per share and Mayson Ltd. reported net income of $27,000 for the year. On June 15, 2021, Clarke Inc. sold the shares for $37,000. Both Clarke Inc. and Mayson Ltd. have April 30, 2021 year-ends. Prepare dated journal entries for the investment on the acquiring company's books and from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
On March 22, 2023, Amelia, Inc., purchased 500 shares of its own common stock in the market for $21 per share. On May 19, 2023, the company sold 300 of these shares in the open market at a price of $24 per share. Required: Use the horizontal model (or write the entry) to show the effects on Amelia, Inc.'s financial statements of: a). The purchase of the treasury stock on March 22, 2023. The sale of the treasury stock on May 19, 2023. b).
Metlock Corporation made the following cash purchases of securities during 2020, which is the first year in which Metlock invested in securities. 1. On January 15, purchased 11,600 shares of Sanchez Company’s common stock at $ 33.50 per share plus commission $ 2,304. 2. On April 1, purchased 5,800 shares of Vicario Co.’s common stock at $ 52 per share plus commission $ 3,902. 3. On September 10, purchased 8,120 shares of WTA Co.’s preferred stock at $ 26.50 per share plus commission $ 5,692. On May 20, 2020, Metlock sold 4,524 shares of Sanchez Company’s common stock at a market price of $ 35 per share less brokerage commissions, taxes, and fees of $ 4,466. The year-end fair values per share were Sanchez $ 30, Vicario $ 55, and WTA $ 28. In addition, the chief accountant of Metlock told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is…
On January 1, 2021, Kendall Inc. purchased 25,000 shares of Kylie Company at a cost per share of P100. Kylie Company's outstanding ordinary shares are 100,000. Kendall is part of Kylie's board of directors. During the year, Kylie Company paid cash dividends of P700,000 and had a net income of P2,500,000. How much is the Investment in associate on December 31, 2021?
On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the open market in exchange for $16,300. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $93,250. During the next two years, the following information is available for Zip Company: Income Dividends Declared Common StockFair Value (12/31) 2019 $326,000 2020 $79,000 $7,100 373,000 2021 96,000 15,300 481,000 At December 31, 2020, Zip reports a net book value of $299,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2020. Assume Akron applies the equity method to its Investment in Zip account: What amount of equity income should Akron report for 2021? On Akron’s December 31, 2021, balance sheet, what amount is reported for the Investment in Zip…
On July 1, 2020, Selig Company purchased for cash 30% of the outstanding common stock of Spoor Corporation. Both Selig and Spoor have a December 31 year-end. Spoor Corporation, whose common stock is actively traded on the NASDAQ exchange, paid a cash dividend on November 15, 2020, to Selig Company and its other stockholders. It also reported its total net income for the year of $920,000 to Selig Company. Instructions Prepare a one-page memorandum of instructions on how Selig Company should report the above facts in its December 31, 2020, balance sheet and its 2020 income statement. In your memo, identify and describe the method of valuation you recommend. Provide rationale where you can. Address your memo to the chief accountant at Selig Company.
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On April 1, 2024, Sunland Company purchased 44,800 common shares in Ecotown Ltd. for $13 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $15 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (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. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles く Debit Credit
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. Min Hyun Jing Ltd. purchased 21,600 common shares of Glastone Ltd. on January 1, 2018, when the market price was $27.50 per share. This gave Min Hyun Jing 12% of the shares issued by Glastone Ltd. Min Hyun Jing Ltd. has a December 31 year end. For the year ended December 31, 2018, Glastone reported net income of $260,000 and declared dividends of $1.10 per share on December 31. The trading price of Glastone’s shares on that date was $31.20. For the year ended December 31, 2019. Glastone reported net income of $280,000 and declared dividends of $1.15 per share on December 31. The trading price of Glastone’s shares on December 31 was 34.60. Min Hyun Jing Ltd. purchased an additional 20,000 common shares on this date. For the year ended December 31, 2020, Glastone reported a net loss of $80,000, but still declared dividends on December 31, in the amount of $0.75 per share. The trading price of Glastone’s shares on December 31, 2019 was $30.50 per share. For the year ended…