On January 1, 2023, EE Company acquired 70,000 shares, representing 20% of the outstanding shares of WW Limited, at a price of $10 per share. On July 31, 2023, WW declared and paid a dividend of $1 per share. WW's net income for 2023 was $1,250,000. On December 31,2023, the shares of WW were trading on the Toronto Stock Exchange at $14 per share.RequiredEE is not sure how to report its investment in WW shares. Using the following format, indicate the amounts that would appear on the balance sheet and the statement of comprehensive income for 2023 if the investment (a) has been irrevocably elected to be measured at fair valuethrough OCI, (b) is classified as FVPL, or (c) is an associate.Complete the balance sheet in the following table. (For entries with a $0 balance, make sure to enter "0" in the appropriate column.)Balance sheetInvestment in WW sharesFair value through OCIelectionFVPLAssociate

The objective of the question is to determine how EE Company should report its investment in WW…

Answered: On January 1, 2023, EE Company acquired…

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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Titanic Corporation's net income for the year ended December 31, 2019, is $380,000. On June 30, 2019, a $0.75 per-share cash dividend was declared for all common stockholders. Common stock in the amount of 38,000 shares was outstanding at the time. The market price of Titanic's stock at year end (12/31/19) is $18 per share. Titanic had a $1,100,000 credit balance in retained earnings at December 31, 2018. Required: Calculate the ending balance (12/31/19) of retained earnings.
The following activities relate to Merrill Company during the years 2018 and 2019: 2018: Feb. 15 Merrill purchased 10,000 shares of Hendershot Equipment stock for $40 per share. Dec. 1 Merrill received an $0.80-per-share cash dividend from Hendershot Equipment. Dec. 31 Hendershot Equipment common stock had a closing market price of $97 per share. Hendershot’s 2018 net income was $120,000. 2019: July 1 Merrill sold all 10,000 shares of Hendershot Equipment stock for $42 per share. Additional information: Hendershot Equipment had 50,000 shares of common stock outstanding on January 1, 2018. Required: Prepare journal entries to record the transactions assuming: a.) The securities are classified as FVTOCI financial assets-equity. b.)The equity method is used. Show the amounts that would be reported on the financial statements of Merrill Company at December 31, 2018, under each assumption. Can Merrill use the equity method to account for its investment in Hendershot Equipment?
The balance sheet of Chunn Industries included the following shareholders’ equity section at December 31, 2018 ($ in millions): Common stock ($1 par value, authorized 100M shares, issued and outstanding 90M shares) $ 90 Paid-in capital—excess of par 540 Retained earnings 280 Total shareholders’ equity $910 On January 5, 2019, Chunn purchased and retired 1 million shares for $9 million. Immediately after the purchase of the shares, the balances in the paid-in capital—excess of par and retained earnings accounts are:
For the year ended December 31, 2024, Norstar Industries reported net income of $980,000. At January 1, 2024, the company had 1,130,000 common shares outstanding. The following changes in the number of shares occurred during 2024: April 30 May 24 June 1 Sold 100,000 shares in a public offering Declared and distributed a 5% stock dividend Issued 114,000 shares as part of the consideration for the purchase of assets from a subsidiary Required: Compute Norstar's earnings per share for the year ended December 31, 2024. Show computations. Numerator Denominator Earnings per Share
Atlanta Co. has 100,000 common shares outstanding as of January 1, 2020 and after-tax net income of $300,000 for 2020. On March 31, 2020 Atlanta Co repurchased 5,000 shares of its outstanding common stock. On October 1, 2020, the company issues an additional 50,000 shares of common stock. On October 31, 2020 the company distributed a stock dividend of 40%. The company also has 20,000 shares of 4% $10 par cumulative preferred stock outstanding. Assume that 5,000 shares of the preferred stock have the option to be converted to 2,000 shares of common stock at any time. In 2019 Atlanta Co. issued stock options to its 2 top executives that allow them to each purchase up to 1,000 shares of common stock at a purchase price of $25 per share. The current market price of Atlanta Co common stock is $40 per share and Atlanta Co.’s income tax rate is 30%. Compute the Basic EPS___________________________ Compute Fully Diluted EPS_________________________ *Urgent
On April 2, 2020, enson Ltd. acquired 2,500 shares of Lam Corp. for $5o,000: ihts investmentrepresents a 18% interest in Lam Corp. Jenson Ltd. has classified this investment as FVTLP. OnOctober 31, 2020, Lam Corp. paid a $42,000 dividend to its shareholders. At March 31, 2021, LamCorp.'s shares were valued at $15 per share and Lam Corp. reported net income of $145,000 forthe year. On May 15, 2021, Jenson Ltd. sold the shares for $25,000. Both Jenson Ltd. and LamCorp. have March 31, 2021 year-ends.Required:Prepare dated journal entries for the investment on the acquiring company's books fromacquisition to disposal. Ignore income taxes. Journal entry descriptions are optional:
For the year ended December 31, 2021, Norstar Industries reported net income of $990,000. At January 1, 2021, the company had 1,170,000 common shares outstanding. The following changes in the number of shares occurred during 2021: Apr. 30 Sold 110,000 shares in a public offering. May 24 Declared and distributed a 5% stock dividend. June 1 Issued 126,000 shares as part of the consideration for the purchase of assets from a subsidiary. Required: Compute Norstar's earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Round "EPS" answer to 2 decimal places. Do not round intermediate calculations.) Numerator / Denominator / Earnings per Share
On January 1, 2020, Windsor Company purchased 6,100 shares of Kusher Company stock for $439,200. Windsor's investment represents 30 percent of the total outstanding shares of Kusher. During 2020, Kusher paid total dividends of $152,000 and reported net income of $456,000. What revenue does Windsor report related to this investment and what is the amount to be reported as an investment in Kusher stock at December 31? Revenue $ Investment in Kusher stock at December 31 $
12. Sina Company purchased 10,000 shares representing 2% ownership of Heyoon Company on February 15, 2018. Sina received a stock dividend of 2,000 shares on March 31, 2018, when the carrying amount per share on Heyoon’s books was P350 and the market value per share was P400. Heyoon paid a cash dividend of P15 per share on September 15, 2018. In Sina’s income statement for the year ended October 31, 2018, what amount should Sina report as dividend income?
On January 1, 2020, Dallas Company purchased 80,000 shares of Washington Company's $10 par common stock for $42 per share. During 2020, Washington paid total dividends of $600,000 and reported net income of $900,000. Washington stock was trading for $44 per share on December 31, 2020. During 2021, Washington paid total dividends of $100,000 and reported net loss of $300,000. Washington stock was trading for $40 per share on December 31, 2021. Instructions: a. Prepare all necessary journal entries for 2020 and 2021 if Washington has 800,000 shares of common stock outstanding. b. Prepare all necessary journal entries for 2019 and 2020 if Washington has 200,000 shares of common stock outstanding.
On January 1, 2022, Mojito Corporation purchased 20% (20,000 shares) of the outstanding stock of Dulcinea Corporation for $153,000. During 2022, Dulcinea Corporation paid total dividends of $45,000 and earned $80,000 in net income. At the end of 2022, Dulcinea Corporation’s stock had a fair market value of $155,000. Required: Prepare the journal entries that Mojito would make during 2022 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (i.e. fair value method). Prepare the journal entries that Mojito would make during 2022 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method).
Cookie Company had 3.0 million shares of common stock outstanding all through 2020. On April 1, 2021, an additional 110,000 shares were sold and issued. On September 30, 2021, Cookie declared a 2-for-1 stock split. Net income in 2021 and 2020 was $20 million and $13.0 million, respectively. In the 2021 comparative financial statements, EPS (rounded) would be reported as follows: 2021 EPS 2020 EPS a. $ 3.24 $ 2.17 b. $ 3.24 $ 4.34 c. $ 6.48 $ 2.17 d. $ 6.48 $ 4.34

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