On December 31, 2020, Lea Company, an entity with no subsidiary, purchased 10,000 ordinary shares of Sun Valley Corporation at P150 per share. At the time of the purchase, Sun Valley has an outstanding 50,000 shares with a total shareholders' equity of P7,500,000. For the year 2021, Sun Valley reported profit of P3,000,000. On December 30, Lea received a cash dividend of P50 per share. Based only on the foregoing information, what is the investment carrying value at December 31, 2021? A P2,100,000 B P1,500,000 P1,600,000 P2,600,000

On December 31, 2020, Lea Company, an entity with no subsidiary, purchased 10,000 ordinary shares of Sun Valley Corporation at P150 per share. At the time of the purchase, Sun Valley has an outstanding 50,000 shares with a total shareholders' equity of P7,500,000. For the year 2021, Sun Valley reported profit of P3,000,000. On December 30, Lea received a cash dividend of P50 per share. Based only on the foregoing information, what is the investment carrying value at December 31, 2021? A P2,100,000 B P1,500,000 P1,600,000 P2,600,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 18, 2020, Ehrlich Company purchased 40,000 shares (10%) of common stock of Portal Corporation as a long-term investment for $950,000. On March 26, 2020, Portal paid dividends of $0.30 per share. On July 19, 2020, Ehrlich sold 10,000 of its shares for $28 per share. On September 29,2020, Portal paid a dividend to shareholders of $0.50 per share. Instructions Prepare the journal entry to record the investment in Portal stock. Record the entry for the receipt of dividends on March 26, 2020 Record the sale of the shares on July 19, 2020 Record the receipt of dividends on September 29,2020 What is the balance of the Stock Investments account on Ehrlich Company's books at the end of the year?.
On January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to the acquisition, XYZ had 100,000 shares of stock outstanding. On the date of acquisition, XYZ's stock had fair value of P52 per share. During the year, XYZ reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on ABC's balance sheet on December 31, year 1?
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 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 January 1, 2025, Riverbed Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for $1.510.000. At the time, the book value and the fair value of John's net assets were $12,900,000 On July 1, 2026. Riverbed paid $2.760.000 for 46,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Riverbed owns 30% of John and can exercise significant influence over John's operating and financial policies John reported the following net income and declared and paid the following dividends Dividend per Share None Year ended 12/31/25 Six months ended 6/30/26 Six months ended 12/31/26 Net Income $680,000 $20,000 Investment in Eton John Corp 888.000 None $1.50 Determine the ending balance that Riverbed Co should report as its investment in John Corps at the end of 2026
On January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to the acquisition, XYZ had 100,000 shares of stock outstanding. On the date of acquisition, XYZ's stock had fair value of P52 per share. During the year, XYZ reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on ABC's balance sheet on December 31, year 1?
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.
On January 2, 2022, Promenade Company purchased 25% of Twilight Company'S ordinary shares: no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight's investment account was 3,800,000 at December 31, 2022. Twilight reported net income of 2, 400, 000 for the year and paid dividends amounting to 960,000 during 2022. How much did Promenade pay for it's investment?
On January 1, 2021, Ildiko Corporation purchased a 35% interest in the common shares of Rance Ltd. for $60,000. Rance Ltd. reported profit and paid dividends as follows: 2020-profit $40,000; dividends paid $50,000 2021 - profit $88,000; dividends paid $70,000. Assume that Ildiko Corporation uses the equity method to account for its investment in Rance Ltd. The balance in the "Investment Income" account on Ildiko's Income Statement for the year ended December 31, 2021 is $62,800 O $61,750 O $5,250 $43,750
. 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…
At December 31, 2020 year-end, Lapwing Corporation's investment in Ground Inc. was $200,000 consisting of 80% of Ground's $250,000 stockholders' equity on that date. On April 1, 2021, Lapwing sold 20% interest (one-fourth of its holdings) in Ground for $65,000. During 2021, Ground had net income of $75,000 (earned uniformly) and on July 1, 2021, Ground paid dividends of $40,000. Lapwing uses the equity method to account for the investment. Required: 1. What is the gain or loss on sale of the 20% interest? 2. Record the journal entries for Lapwing for the year ending December 31.
On January 1, 2021, Pancake Co. bought 250,000 ordinary shares of House Co. for P3,000,000, representing 25% of the outstanding shares of House, and allowing Pancake to exercise significant influence over House. Pancake has determined that the book value of House's net assets approximates its fair value. During 2021, House earned a net income of P4,000,000. The entity also declared and paid total cash dividends of P1,000,000 during the year. At the end of the year, there was objective evidence of impairment for the shares. The recoverable amount was determined to be at P2,900,000.