On January 1, 2013, Ruark Corporation acquired a 40 percent interest in Batson, Inc., for$210,000. On that date, Batson's balance sheet disclosed net assets with both a fair andbook value of $360,000. During 2013, Batson reported net income of $80,000 and paidcash dividends of $25,000. Ruark sold inventory costing $30,000 to Batson during 2013for $40,000. Batson used all of this merchandise in its operations during 2013. Prepareall of Ruark's 2013 journal entries to apply the equity method to this investment.General JournalDebitTo record acquisition.Investment in Batson, Inc.CashTo recognize income earned.Investment in Batson, Inc.Equity in Investee IncomeTo record collection of dividend.CashInvestment in Batson, Inc.Credit

The equity method is a type of accounting used to record an investment in a company where the…

Answered: On January 1, 2013, Ruark Corporation…

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 1, 2015, Peanut Company acquired 80% of the common stock ofSalt Company for $200,000. On this date, Salt had total owners’ equity of $200,000 (includingretained earnings of $100,000). During 2015 and 2016, Peanut appropriately accounted for itsinvestment in Salt using the simple equity method. Any excess of cost over book value is attributable to inventory (worth $12,500 more thancost), to equipment (worth $25,000 more than book value), and to goodwill. FIFO is used forinventories. The equipment has a remaining life of four years, and straight-line depreciation isused. On January 1, 2016, Peanut held merchandise acquired from Salt for $20,000. During2016, Salt sold merchandise to Peanut for $40,000, $10,000 of which was still held by Peanuton December 31, 2016. Salt’s usual gross profit is 50%. On January 1, 2015, Peanut sold equipment to Salt at a gain of $15,000. Depreciation isbeing computed using the straight-line method, a 5-year life, and no salvage value.The following…
On 1 January 2017, Al Yousef Group acquired 30% of the outstanding voting shares of Saleh Enterprises for OMR 2,000,000 in cash, a price that was equal to 30% of Saleh's net assets. The investment gave Al Yousef significant influence over Saleh. During the year ending December 31, 2017, Saleh had Net Income of OMR 200,000 and paid dividends of OMR 40,000. For the year ending December 31, 2018, Saleh had a net income of OMR 250,000, and paid dividends of OMR 50,000. For the year ending December 31, 2019, Saleh's business started to have some operational issues that they had a Net Loss of OMR 25,000, however they still managed to pay dividends of OMR 10,000. For the year ending December 31, 2020, because of COVID-19, Saleh had a Net Loss of OMR 50,000 and no dividends have been paid for 2020. Please answer the following questions pertaining to Al Yousef Company: Questions No. 32, 33 and 34 What will be the journal entry to record their share in Saleh's dividends on December 31, 2017?…
Acker Company bought 100% of Howell Company on 1/1/X1 for $1,440,000 and began applying the equity method. The book value of Howell's equity on that date was $1,440,000. In year X1, Howell reported net income of $100,000 and paid $40,000 in dividends. During year X1, Howell sold 1,000 units of inventory to Acker for $20,000 that had cost $10,000. On 12/31/X1, 400 of the units remained in Acker's inventory. How much investment income should Acker report in year X1
On 1 January 2017, Al Yousef Group acquired 30% of the outstanding voting shares of Saleh Enterprises for OMR 2,000,000 in cash, a price that was equal to 30% of Saleh's net assets. The investment gave Al Yousef significant influence over Saleh. During the year ending December 31, 2017, Saleh had Net Income of OMR 200,000 and paid dividends of OMR 40,000. For the year ending December 31, 2018, Saleh had a net income of OMR 250,000, and paid dividends of OMR 50,000. For the year ending December 31, 2019, Saleh's business started to have some operational issues that they had a Net Loss of OMR 25,000, however they still managed to pay dividends of OMR 10,000. For the year ending December 31, 2020, because of COVID-19, Saleh had a Net Loss of OMR 50,000 and no dividends have been paid for 2020. Please answer the following questions pertaining to Al Yousef Company: Questions No. 32, 33 and 34 What will be the journal entry to record their share in Saleh's net loss on December 31, 2019? a.…
CFR, Inc. purchased a 10% interest in The Candy Company on January 2, 2013. The purchase price was $400,000. CFR's officers constitute a majority of The Candy Company's board of directors. The investee reported net income of $500,000 and paid dividends of $150,000 in 2013. On the December 31, 2013, balance sheet, what amount should CFR report as Equity Investment in The Candy Company? a. $900,000 b. $870,000 c. $800,000 d. $830,000 The answer is B, but I don't understand why
e of cents Price Company purchased 90% of the outstanding common stock of Score Company on January 1, 2016, for $450,000. At that time, Score Company had stockholders' equity consisting of common stock, $200,000; other com $160,000; and retained earnings, $90,000. On December 31, 2020, trial balances for Price Company and Score Company were as follows: Price $ 109,000 $ Cash Accounts Receivable Note Receivable Inventory Investment in Score Company Plant and Equipment Land Score 78,000 94,000 -0- 166,000 75,000 309,000 158,000 450,000 -0- 940,000 420,000 160,000 70,000 70,000 50,000 822,000 242,000 250,500 124,000 Dividends Declared Cost of Goods Sold Operating Expenses Total Debits Accounts Payable Notes Payable Common Stock $3,351,500 $1,236,000 $ 132,000 $ 46,000 300,000 120,000 500,000 200,000 260,000 160,000 Other Contributed Capital Retained Earnings, 1/1 Sales Dividend and Interest Income Total Credits 687,000 1,420,000 52,500 $3.351,500 $1,236,000 210,000 500,000 -0- Price…
On January 1, 2012, P Corporation purchased 80% of S Company's outstanding stock for P620,000. At that date, all of S Company's assets and liabilities had market values approximately equal to their book values and no goodwill was included in the purchase price. The following information was available for 2012: Income from own operations of P Corporation, P150,000; Operating loss of S Company, P20,000. Dividends paid in 2012 by P Corporation, P75,000; by S Company to P Corporation, P12,000. On July 1, 2012, there was a downstream sale of equipment at a gain of P25,000. The equipment is expected to have a remaining useful life of 10 years from the date of sale. Also, on January 1, 2012, there was an upstream sale of furniture at a loss of P7,500. The furniture is expected to have a useful life of five years from the date of sale. Non-controlling interest is measured at fair market value. 1. How much is the consolidated net income attributable to parent shareholders' equity? A. P97,250 B.…
On January 1, 2013, BAZINGA Co. purchased 80% of MEEMAW Co.'s outstanding stock for $62,000. At that date, all of MEEMAW's assets and liabilities had market values approximately equal to their book values and no goodwill was included in the purchase price. The following information was available for 2013: Income from own operations of Parent-$15,000 Operating Loss of Subsidiary-$2,000 Dividends paid in 2013 by parent-$7,500 Dividends paid by Subsidiary to Parent-$1,200. On July 1 ,2013, there was a downstream sale of equipment at a gain of $2,500. The equipment is expected to have a remaining useful life of 10 years from the date of sale. Also, on January 1, 2013, there was an upstream sale of furniture at a loss of $750. The furniture is expected to have a useful life of five years from the date of sale. Non-controlling interest is measured at fair value. Determine the consolidated net income attributable to the parent shareholders' equity.
Braviary Corp. acquired a 70% interest in Vullaby Company in 20A. For the year ended December 31, 20A and 20B, Vullaby Company reported an income of P160,000 and P180,000, respectively. During 20A, Vullaby sold merchandise to Braviary Corp. for P20,000 at a profit of P4,000. The merchandise was later resold by Braviary Corp. to outsider for P30,000 during 20B. For consolidation purposes, what is the minority interest's share of Vullaby's net income for 20A and 20B, respectively. * A. P49,200 and P52,800 B. Answer not given C. P53,200 and P50,000 D. P46,800 and P55,200 E. P48,000 and P54,000
Terry’s Concrete acquired 20% of the outstanding common stock of Blakeley, Inc. on January 1, 2010, by paying $1,100,000 for 40,000 shares. Blakeley declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2010. Blakeley reported net income of $600,000 for the year. At December 31, 2010, the market price of Blakeley’s common stock was $40 per share. Instructions (a) Prepare the journal entries for Terry’s Concrete for 2010 assuming Terry’s cannot exercise significant influence over Blakeley
Shalles Corporation, an 80%-owned subsidiary of Pani Corporation, sold inventory items to its parent at a $48,000 profit in 2014. Pani resold one-third of this inventory to outside entities. Shalles reported net income of $200,000 for 2014. Noncontrolling interest share of consolidated net income that will appear in the income statement for 2014 is A. $32,000. B. $33,600. C. $40,000. D. $30,400.

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS