On January 1, Dyer Co. acquired as a long-term investment a 20% common stock interest in Eason Co. Dyer paid $700,000 for this investment when the fair value and carrying amount of Eason's net assets was $3.5 million. Dyer can exercise significant influence over Eason's operating and financial policies.Dyer did NOT elect the fair value option to account for this investment. For the year ended December 31, Eason reported net income of $203,000 and declared and paid cash dividends of $37,000. How much income from this investment should Dyer report for the year on its income statement?

On January 1, Dyer Co. acquired as a long-term investment a 20% common stock interest in Eason Co. Dyer paid $700,000 for this investment when the fair value and carrying amount of Eason's net assets was $3.5 million. Dyer can exercise significant influence over Eason's operating and financial policies.Dyer did NOT elect the fair value option to account for this investment. For the year ended December 31, Eason reported net income of $203,000 and declared and paid cash dividends of $37,000. How much income from this investment should Dyer report for the year on its income statement?

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

Marigold Corporation purchased 630 common shares of Ditch Inc. for $12,900 on February 21. Marigold paid a 1% commission on the share purchase and, because the shares were not publicly traded, decided to account for them following the cost model. On June 30, Ditch declared and paid a cash dividend of $1.90 per share. (a) Prepare Marigold Corporation's journal entry to record the purchase of the 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. List debit entry before credit entry.) Date Account Titles and Explanation Feb. 21 Debit Credit
Conroy Financial paid $530,000 for a 20% investment in the common stock ofMaverick, Inc. For the first year, Maverick reported net income of $270,000, and at year-enddeclared and paid cash dividends of $115,000. On the balance-sheet date, the fair value of Conroy’s investment in Maverick stock was $410,000.Requirements1. Which method is appropriate for Conroy to use in its accounting for its investment inMaverick? Why?2. Show everything that Conroy would report for the investment and any investment revenuein its year-end financial statements.
Cheyenne Corporation purchased for $327,000 a 25% interest in Murphy, Inc. This investment enables Cheyenne to exert significant influence over Murphy. During the year, Murphy earned net income of $185,000 and paid dividends of $62,000. Prepare Cheyenne's journal entries related to this investment. (Credit account titles are automatically indented when 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.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the net income.) (To record the dividend.) L
Sunland Corporation purchased 370 shares of Sherman Inc. common stock for $ 13,100 ( Sunland does not have significant influence). During the year, Sherman paid a cash dividend of $ 3.00 per share. At year-end, Sherman stock was selling for $ 37.50 per share.Prepare Sunland's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the purchase of the investment enter a debit amount enter a credit amount enter an account title to record the purchase of the investment enter a debit amount enter a credit amount (b) enter an account title to record…
Sandhill Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Sandhill to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Sandhill's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when 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.)
Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Concord's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when 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.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the net income.) (To record the dividend.)
Carla, Inc. purchased 1,810 shares of Oneida Corporation common stock for $84,600. During the year. Oneida paid a cash dividend of $1.10 per share. At year-end, Oneida stock was selling for $43.90 per share. Prepare Carla's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when 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.) (a) (b) (c) Account Titles and Explanation Debit Credit
Sabado Gigante is viewed by 22,862 households in a market where there are a total of 221,104 television households. At the time of the broadcast, 168,767 households were watching something on TV. Calculate the rating for this TV program. (Rounding: tenth of a rating point.)
Pronghorn Corporation purchased for $ 322,000 a 30% interest in Murphy, Inc. This investment enables Pronghorn to exert significant influence over Murphy. During the year, Murphy earned net income of $ 183,000 and paid dividends of $ 60,000.Prepare Pronghorn’s journal entries related to this investment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record the purchase enter a debit amount enter a credit amount enter an account title to record the purchase enter a debit amount enter a credit amount (To record the purchase.) enter an account title to record the net income enter a debit amount enter a credit amount enter an account title to record the net income enter a debit amount enter a credit amount (To record the…
3. On January 1, 2018, Hina Company acquired as a long-term investment a 20% ordinary share interest in Shivani Company. Hina paid P7, 000,000 for this investment when the fair value of Shivani’s net assets was P35, 000,000. Hina can exercise significant influence over Shivani’s operating and financial policies. For the year ended December 31, 2018, Shivani reported net income of P4,000,000 and declared and paid cash dividends of P1,600,000. How much revenue from the investment should Hina report for 2018? 4. On July 1, 2018, Melanie Company purchased 30,000 shares of Eagle Company’s 100,000 outstanding ordinary shares for P200 per share. On December 15, 2018, Eagle paid P400,000 in dividends to its ordinary shareholders. Eagle’s net income for the year ended December 31, 2018 was P1,200,000, earned evenly throughout the year. In its 2018 income statement, what amount of income from the investment should Denver report? 5. Savannah Company bought 40% of Diarra Company’s…
On January 1, 2007, Ausser Ltd. acquires 40 percent of the outstanding voting shares of Aussee Inc. for $400,000. Ausser accounts for its Investment In Aussee using the equity method. Ausser has no commitments to provide any type of financial support for Aussee subsequent fiscal periods. During the year ending December 31, 2007, Aussee experiences a Net Loss of $1,500,000. During the year ending December 31, 2008, Aussee has Net Income of $800,000. No dividends were paid in either year. Provide the journal entries to record Ausser's Investment Income (Loss) for the years ending December 31, 2007 and December 31, 2008 and calculate the balance in the Investment in Aussee account as at December 31, 2008
L Company owns 30% of S Company’s common stock which gives it the ability to apply significant influence and thus uses the equity method of accounting for its investment. During 2020 L Company sold inventory costing $120,000 to S company for $200,000. Also during 2020 S company resold $85,000 of this inventory to third parties. What journal entry would L Company make at the end of 2020 to defer the intra-entity gross profit?