On January 4, 2021, Snow Co. purchased 40,000 shares (40%) of the common stock of Walker Corp., paying $900,000. There was no goodwill or other cost allocation associated with the investment. Snow has significant influence over Walker. During 2021. Walker reported income of $240,000 and paid dividends of $75,000. On January 2, 2022, Snow sold 5,000 shares for $125,00o. What was the balance in the investment account after the shares had been sold? Multiple Choice $871,500. $845,250. $761,250. $897.250. < Prev 8 of 10 Next >

On January 4, 2021, Snow Co. purchased 40,000 shares (40%) of the common stock of Walker Corp., paying $900,000. There was no goodwill or other cost allocation associated with the investment. Snow has significant influence over Walker. During 2021. Walker reported income of $240,000 and paid dividends of $75,000. On January 2, 2022, Snow sold 5,000 shares for $125,00o. What was the balance in the investment account after the shares had been sold? Multiple Choice $871,500. $845,250. $761,250. $897.250. < Prev 8 of 10 Next >

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

Kindly explain properly
On January 1, 2024, Nana Company paid $100,000 for 6,300 shares of Papa Company common stock. The ownership in Papa Company is 10%. Nana Company does not have significant influence over Papa Company. Papa reported net Income of $51,000 for the year ended December 31, 2024. The fair value of the Papa stock on that date was $50 per share. What amount will be reported in the balance sheet of Nana Company for the Investment in Papa at December 31, 2024? Multiple Choice O O $270,000 $315,000 $255,000 $240,000
Sage Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Sage does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share.Prepare Sage'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 the dividends…
On May 1, 2020, Clarke Inc. acquired 1,250 shares of Mayson Ltd. for $75,000. This investment represents a 16% interest in Mayson Ltd. and Clark Inc. has significant influence. On December 31, 2020, Mayon Ltd. paid a $35,000 dividend to its shareholders. At April 30, 2021 Mayson Ltd.'s shares were valued at $30 per share and Mayson Ltd. reported net income of $27,000 for the year. On June 15, 2021, Clarke Inc. sold the shares for $37,000. Both Clarke Inc. and Mayson Ltd. have April 30, 2021 year-ends. Prepare dated journal entries for the investment on the acquiring company's books and from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
The following are independent situations. Situation 1: Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2020. On June 30, Martinez declared and paid $75,000 cash dividends to all stockholders. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2: Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $36,000 to all stockholders. On December 31, Seles reported a net income of $85,000 for the year. Instructions Prepare all necessary journal entries in 2020 for both situations.
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $341,000. Amortization of excess fair value associated with the 30% ownership is $17,400 per year. In 2021, Lindman earns an income of $159,000 and declares cash dividends of $53,000. Previously, in 2020, Lindman had sold inventory costing $47,200 to Matthew for $59,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $60,800 to Matthew for $80,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2021?
Packard Inc. is a public company. On January 1, 2020 Packard Inc. purchased 10,000 common shares (15%) of Saturn Inc. for $115,000 in cash. Saturn had common shares of $225,000 and retained earnings of $475,000 on this date. Packard considered Saturn a FVTPL investment; as it did not give Packard significant influence. On December 31, 2020 the Saturn shares were trading at $13.00 per share. On January 1, 2021, Packard purchased an additional 25% of Saturn's shares for $217,000 in cash. This second purchase allowed Packard to exert significant influence over Saturn. The following information was available on the date of acquisition: Carrying Value Fair Value Assets not subject to depreciation $205,000 Assets subject to depreciation (10 year useful life) 750,000 Patent (7 year useful life) 35,000 Liabilities 115,000 115,000 Saturn depreciates assets using the straight-line method and has a 35% tax rate. During the two years, Saturn reported the following: Dividends Declared $275,000…
dams Industries holds 40,000 shares of FedEx common stock, which is not a large enough ownership interestto allow Adams to exercise significant influence over FedEx. On December 31, 2018, and December 31, 2019,the market value of the stock is $95 and $100 per share, respectively. What is the appropriate reporting categoryfor this investment and at what amount will it be reported in the 2019 balance sheet?
Storytime Books, LLC purchased the following shares of ABC stock: 60 shares for $1,700 in 2017. 70 shares for $2,250 in 2018. 80 shares for $2,675 in 2019. They sold 160 shares of ABC in 2021 and did not identify which shares they sold. What basis should they use for computing gain or loss? (a) $5,108 (b) $4,971 (c) $4,953 (d) $4,942
Concord Corporation purchased 360 shares of Sherman Inc. common stock for $11,900 (Concord does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.50 per share. Prepare Concord' 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.) (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.) No. Account Titles and Explanation Debit Credit (a) (b) (c)
On January 1, 2015, Fisher Corporation paid $2,290,000 for 35 percent of the outstanding voting stock of Steel, Inc., and appropriately applies the equity method for its investment.Any excess of cost over Steel’s book value was attributed to goodwill. During 2015, Steel reports $720,000 in net income and a $100,000 other comprehensive income loss. Steel also declares and pays $20,000 in dividends. What amount should Fisher report as its Investment in Steel on its December 31, 2015, balance sheet? What amount should Fisher report as Equity in Earnings of Steel on its 2015 income statement?
On January 1, 2021, Pancake Co. bought 250,000 ordinary shares of House Co. for P3,000,000, representing 25% of the outstanding shares of House, and allowing Pancake to exercise significant influence over House. Pancake has determined that the book value of House's net assets approximates its fair value. During 2021, House earned a net income of P4,000,000. The entity also declared and paid total cash dividends of P1,000,000 during the year. At the end of the year, there was objective evidence of impairment for the shares. The recoverable amount was determined to be at P2,900,000.