On January 3, 2019, Sheppard Corporation purchased 15% of Meredith Corporation's common stock for $62,000. The investment was classified as available-for-sale. Meredith's net income for the years ended December 31, 2019 and 2020 were $18,000 and $56,000 respectively. Meredith declared no dividends during 2019; however, during 2020, the company declared a $70,000 dividend. On December 31, 2019, the fair value of Meredith's stock that Sheppard Corporation owned had increased to $73,000; in 2020, it increased again to $75,000. If Sheppard sold all of its shares of Meredith for $75,000 at the end of 2020, what would be the effect on net income for this transaction? $1.950 gain O $11.000 gain $0 gain $13,000 gain
On January 3, 2019, Sheppard Corporation purchased 15% of Meredith Corporation's common stock for $62,000. The investment was classified as available-for-sale. Meredith's net income for the years ended December 31, 2019 and 2020 were $18,000 and $56,000 respectively. Meredith declared no dividends during 2019; however, during 2020, the company declared a $70,000 dividend. On December 31, 2019, the fair value of Meredith's stock that Sheppard Corporation owned had increased to $73,000; in 2020, it increased again to $75,000. If Sheppard sold all of its shares of Meredith for $75,000 at the end of 2020, what would be the effect on net income for this transaction? $1.950 gain O $11.000 gain $0 gain $13,000 gain
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Question
![Question 3
On January 3, 2019, Sheppard Corporation purchased 15% of Meredith Corporation's common stock for $62,000. The investment was classified as
available-for-sale. Meredith's net income for the years ended December 31, 2019 and 2020 were $18,000 and $56,000 respectively. Meredith
declared no dividends during 2019; however, during 2020, the company declared a $70,000 dividend. On December 31, 2019, the fair value of
Meredith's stock that Sheppard Corporation owned had increased to $73,000; in 2020, it increased again to $75,000. If Sheppard sold all of its shares
of Meredith for $75,000 at the end of 2020, what would be the effect on net income for this transaction?
O $1,950 gain
O $11,000 gain
O $0 gain
O $13,000 gain
uestion 4
eyer Jewelers acquired a percentage of the outstanding voting shares of Angel & Associates by acquiring 18,000,000 of the outstanding 60,00
ares at a cost of $2 per share. On the purchase date, Angel's book value of net assets equaled its fair value. During the year, Angel reported a
ich dividend of $3.00 per share. Assuming this investm
H](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe890579c-94a4-423d-91dd-4fb21feea66a%2F55a8a11a-e2b2-4eb4-9776-5033ed95b806%2Fhdqf5u_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 3
On January 3, 2019, Sheppard Corporation purchased 15% of Meredith Corporation's common stock for $62,000. The investment was classified as
available-for-sale. Meredith's net income for the years ended December 31, 2019 and 2020 were $18,000 and $56,000 respectively. Meredith
declared no dividends during 2019; however, during 2020, the company declared a $70,000 dividend. On December 31, 2019, the fair value of
Meredith's stock that Sheppard Corporation owned had increased to $73,000; in 2020, it increased again to $75,000. If Sheppard sold all of its shares
of Meredith for $75,000 at the end of 2020, what would be the effect on net income for this transaction?
O $1,950 gain
O $11,000 gain
O $0 gain
O $13,000 gain
uestion 4
eyer Jewelers acquired a percentage of the outstanding voting shares of Angel & Associates by acquiring 18,000,000 of the outstanding 60,00
ares at a cost of $2 per share. On the purchase date, Angel's book value of net assets equaled its fair value. During the year, Angel reported a
ich dividend of $3.00 per share. Assuming this investm
H
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