Parker Investments Co. purchased 30% of the common stock of Brightwood Inc. for $200,000. During the year, Brightwood Inc. earned a net income of $60,000 and paid dividends of $40,000. What is the carrying value of Parker Investments' stake in Brightwood Inc. at year-end? A) $206,000 B) $218,000 C) $220,000 D) $200,000
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- On January 1, Vienna Corporation purchased 40% of the outstanding common stock of the Marietta Corporation for $137,500. During the year, Marietta Corporation reported net income of $50,000 and paid cash dividends of $25,000.The balance of the Investment in the Marietta Corporation account on the books of Vienna Corporation at year-end is: Select one: A. $147,500 B. $135,000 C. $100,000 D. $110,000At a total cost of $6,700,000, Herrera Corporation acquired 238,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 700,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: a. Journalize the entries by Herrera Corporation to record the following information on December 31: 1. Tran Corp. reports net income of $967,000 for the current period.* 2. A cash dividend of $0.29 per common share is paid by Tran Corp. during the current period.* b. Why is the equity method appropriate for the Tran Corp. investment?Scott Co. acquired a 30% interest in Roker, Inc. for $210,000 and appropriately applied the equity method. During the first year, Roker, Inc. reported net income of $125,000 and paid cash dividends totaling $25,000.What amount will Scott report as it relates to the investment at the end of the first year on its income statement? Select one: A. Investment earnings totaling $37,500 B. Investment earnings totaling $22,500 C. Receipt of dividends totaling $7,500 D. Net investment earnings totaling $75,000
- Cosmos Corporation had the following long-term investment transactions. Year 1 January 2 Purchased 5,000 shares of Visual, Inc. for $42 per share. October 15 Received Visual, Inc. cash dividend of $2 per share. December 31 Visual reported a net loss of $66,000 for the year. Year 2 February 2 Sold 5% of the shares of Visual Inc for $7000. Prepare the journal entries Cosmos Corporation should record for these transactions and events.Willard Co. acquired a 30% interest in Diltronics for $420,000 and appropriately applied the equity method. During the first year, Diltronics reported net income of $250,000 and paid cash dividends totaling $50,000. What amount will Willard report as it relates to the investment at the end of the first year on its income statement? Show the calculation used to get the answer Investment earnings totaling $75,000 Investment earnings totaling $45,000 Net investment earnings totaling $150,000 Receipt of dividends totaling $15,000Madison Corporation purchases an investment in Lake Geneva, Inc. at a purchase price of $20 million cash, representing 40% of the book value of Lake Geneva, Inc. During the year, Lake Geneva reports net income of $3,400,000 and pays $838,000 of cash dividends. At the end of the year, the market value of Madison’s investment is $24 million. What is the year-end balance of the equity investment in Lake Geneva? Select one: a. $21,024,800 b. $24,000,000 c. $20,000,000 d. $22,562,000 e. $21,360,000
- On January 1, year one, the Miller corporation purchased 300, 000 shares of the Mayfair corporation for $ 5.7 million. The investment represented 30% of the Mayfair corporations outstanding common shares during year one Mayfair reported net earnings of $2.25 millionAnd paid a cash dividend of $.15 per share. During year two, Mayfair reported a net loss of $180,000, and again paid a dividend of $.15 per share. Calculate the book value of Miller's investment and Mayfair as of December 31, year and December 31, year two.Wyatt Company acquired 30% interest in the voting stock of Staples Inc. for $650,000. During the first year, Staples Inc. reported net income of $240,000 and paid cash dividends totaling $60,000. What amount will Wyatt Company report on its income statement related to its investment in Staples Inc? O $240,000 O $54,000 O $60,000 $18,000 O $72,000Champaign Corporation purchases 45% of the common stock of Rockville, Inc. at a purchase price of $17.3 million cash. During the year, Rockville reports net income of $2,368,000 and pays $435, 200 of cash dividends. At the end of the year, the market value of Champaign's investment is $19.0 million. What is the year-end balance of the equity investment in Rockville? Select one: a. $20, 103, 200 b. $18, 169, 760 c. None of these are correct d. $17,300,000 e. $ 20,932,800
- West Asset Management Inc. purchased a stock at $78.26 per share at the beginning of the year and held the stock for one year. At the end of the year, West Asset Management sold all of its holdings for this stock at $83.26 per share and received a dividend of $4.25 per share. What was West Asset Management’s total investment return for this stock in the holding period? A. 6.39% B. 15.64% C. 11.82% D. 5.43%At a total cost of $6,700,000, Herrera Corporation acquired 238,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 700,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: . 1. Tran Corp. reports net income of $967,000 for the current period. 2. A cash dividend of $0.29 per common share is paid by Tran Corp. during the current period. 1. Why is the equity method appropriate for the Tran Corp. investment? Herrera’s investment in Tran Corp. represents_______ of the outstanding shares of Tran Corp. An investment amount between______ and _________of the outstanding common stock of the investee is presumed to represent significant influence. The equity method isappropriate when the investor can exercise significant influence over the investee.As a long-term investment at the beginning of the current fiscal year, Company A purchased 30% of Company B's 20 million shares for $60 million. The fair value and book value of the shares were the same at that time. During the year, Company B earned net income of $70 million and distributed cash dividends of $2.00 per share. At the end of the year, the fair value of the shares is $56 million. Required: Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet < 1 2 3 Record the investor's share of net income. Note: Enter debits before credits. Transactions 2 General Journal Debit Credit Investment in equity affiliate 21 Retained earnings 21 Record entry Clear entry View general journal
