On January 1, 2019, Halstead, Inc., purchased 76,000 shares of Sedgwick Company common stock for $1,527,000, giving Halstead 25percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired wasattributed solely to goodwill.Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years.Dividends are declared and paid in the same period.Annual Cash Dividends (paidquarterly)$104,000Net Income$417,000571,000613,00020192020141,0002021156,000On July 1, 2021, Halstead sells 12,160 shares of this investment for $29 per share, thus reducing its interest from 25 to 21 percent, butmaintaining its significant influence.Determine the amounts that would appear on Halstead's 2021 income statement relating to its ownership and partial sale of itsinvestment in Sedgwick's common stock. (Round your intermediate calculations to the nearest whole number.)As total income accrual (no unearned gains)140,990Asgainon sale of shares

Financial Statement: It is a statement consisting of a cash flow statement, income statement, and…

On January 1, 2019, Halstead, Inc., purchased 76,000 shares of Sedgwick Company common stock for $1,527,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Annual Cash Dividends (paid quarterly) $104,000 141,000 156,000 Net Income 2019 $417,000 2020 2021 571,000 613,000 On July 1, 2021, Halstead sells 12,160 shares of this investment for $29 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Determine the amounts that would appear on Halstead's 2021 income statement relating to its ownership and partial sale of its investment in Sedgwick's common stock. (Round your intermediate calculations to the nearest whole number.)

On January 1, 2019, Halstead, Inc., purchased 76,000 shares of Sedgwick Company common stock for $1,527,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Annual Cash Dividends (paid quarterly) $104,000 141,000 156,000 Net Income 2019 $417,000 2020 2021 571,000 613,000 On July 1, 2021, Halstead sells 12,160 shares of this investment for $29 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Determine the amounts that would appear on Halstead's 2021 income statement relating to its ownership and partial sale of its investment in Sedgwick's common stock. (Round your intermediate calculations to the nearest whole number.)

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

domestic
On January 1, 2021, Sledge had common stock of $340,000 and retained earnings of $480,000. During that year, Sledge reported sales of $350,000, cost of goods sold of $180,000, and operating expenses of $62,000. On January 1, 2019, Percy, Inc., acquired 70 percent of Sledge's outstanding voting stock. At that date, $82,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $42,000 to an undervalued building (with a 10-year remaining life). In 2020, Sledge sold inventory costing $24,050 to Percy for $37,000. Of this merchandise, Percy continued to hold $6,000 at year- end. During 2021, Sledge transferred inventory costing $23,100 to Percy for $42,000. Percy still held half of these items at year-end. On January 1, 2020, Percy sold equipment to Sledge for $23,000. This asset originally cost $38,000 but had a January 1, 2020, book value of $13,400. At the time of transfer, the equipment's remaining life was estimated to be five years. Percy…
On January 1, 2021, Sledge had common stock of $240,000 and retained earnings of $380,000. During that year, Sledge reported sales of $250,000, cost of goods sold of $130,000, and operating expenses of $52,000. On January 1, 2019, Percy, Inc., acquired 90 percent of Sledge's outstanding voting stock. At that date, $72,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $32,000 to an undervalued building (with a 10-year remaining life). In 2020, Sledge sold inventory costing $17,550 to Percy for $27,000. Of this merchandise, Percy continued to hold $6,000 at year-end. During 2021, Sledge transferred inventory costing $19,200 to Percy for $32,000. Percy still held half of these items at year-end. On January 1, 2020, Percy sold equipment to Sledge for $18,000. This asset originally cost $28,000 but had a January 1, 2020, book value of $11,400. At the time of transfer, the equipment's remaining life was estimated to be five years. Percy has…
Ruiz Company puchased 30 per cent of Sim Company’s outstanding common stock for $3,000,000 and uses the equity method of accounting. Sim Company reported net income of $ 640,000 for 2018. On 2018 December 31, Sim Company paid a cash dividend of $200,000. In 2019, Sim Company incurred a net loss of $ 65,000. Prepare entries to reflect these events on Ruiz Company’s books.
On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $198,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $353,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $27,000 to Burks during 2021 for $35,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment. 4. Record the collection of dividend from investee.
On January 1, 2022, Halstead, Incorporated, purchased 71,000 shares of Sedgwick Company common stock for $1,554,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Year 2022 2023 2024 Net Income $ 375,000 442,000 619,000 Annual Cash Dividends (paid quarterly) $ 112,000 154,000 173,000 On July 1, 2024, Halstead sells 11,360 shares of this investment for $27 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Required: Determine the amounts that would appear on Halstead's 2024 Income statement relating to its ownership and partial sale of its Investment in Sedgwick's common stock. Total income accrual (no unearned gains) on sale of…
On January 1, 2023, Payne Company bought a 15 percent interest in Scout Company. The acquisition price of $225,500 reflected an assessment that all of Scout’s accounts were fairly valued within the company’s accounting records. During 2023, Scout reported net income of $121,900 and declared cash dividends of $36,200. Payne possessed the ability to significantly influence Scout’s operations and, therefore, accounted for this investment using the equity method. On January 1, 2024, Payne acquired an additional 80 percent interest in Scout and provided the following fair-value assessments of Scout’s ownership components: Consideration transferred by Payne for 80% interest $ 1,454,400 Fair value of Payne's 15% previous ownership 272,700 Noncontrolling interest's 5% fair value 90,900 Total acquisition-date fair value for Scout Company $ 1,818,000 Also, as of January 1, 2024, Payne assessed a $435,000 value to an unrecorded database internally developed by Scout. The database is…
Miller Corporation acquired 30% of the outstanding common stock of Crowell Corporation for $170,000 on January 1, 2018, and obtained significant influence. The purchase price of the shares was equal to their book value. During 2018, the following information is available for Crowell: Mar. 31 Declared and paid a cash dividend of $50,000. June 30 Reported semiannual earnings of $120,000 for the first half of 2018. Sept. 30 Declared and paid a cash dividend of $50,000. Dec. 31 Reported semiannual earnings of $140,000 for the second half of 2018. Required: 1. Prepare journal entries for Miller to reflect the preceding information. 2. What is the balance in Miller’s investment account on December 31, 2018?
On January 1, 2019, Halstead, Inc., purchased 83,000 shares of Sedgwick Company common stock for $1,529,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Net Income Annual Cash Dividends (paid quarterly) 2019 $357,000 $124,000 2020 399,000 144,000 2021 601,000 177,000 On July 1, 2021, Halstead sells 13,280 shares of this investment for $23 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Determine the amounts that would appear on Halstead’s 2021 income statement relating to its ownership and partial sale of its investment in Sedgwick’s common stock. (Round your intermediate calculations to the…
On January 1, 2021, Pepita Corporation purchased 25% of the outstanding voting shares of Pablito Supplies common stock for $210,000 cash. On that date, Pablito's book value and fair value were both $840,000. The equity method is deemed appropriate for this investment. Pablito's net income reported on December 31, 2021, was $100,000. During 2021, Pablito also paid cash dividends in the amount of $30,000. Required: Prepare the journal entries necessary to record the above information on Pepita Corporation's books during 2021.
On January 2, 2020, Howdy Doody Corporation purchased 17% of Ranger Corporation's common stock for $55,000. Ranger's net income for the years ended December 31, 2020, and December 31, 2021, were $11,000 and $56,000, respectively. During 2020, Ranger declared and paid a dividend of $67,500. On December 31, 2020, the fair value of the Ranger stock owned by Howdy Doody had increased to $72,000. How much should Howdy Doody show in the 2020 income statement as income from this investment? $11,475. $23,000. $17,000. $28,475.
BuyCo, Inc., holds 20 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,900 per year. For 2020, Marqueen reported earnings of $117,000 and declares cash dividends of $34,000. During that year, Marqueen acquired inventory for $48,000, which it then sold to BuyCo for $80,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $33,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed?