Peace Company issued common shares with a par value of $58,000 and a market value of $165,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable SYMBOL CORPORATION Balance Sheet January 1, 20X2 Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities. Book Value Fair Value $ 57,000 $ 57,000 97,000 97,000 133,000 55,000 505,000 (245,000) Investment income (loss) Balance in the investment account $ 602,000 $ 22,000 172,000 148,000 12,000 248,000 $ 602,000 163,000 70,000 326,000 32,000 $ 745,000 $ 22,000 172,000 The estimated economic life of the patents held by Symbol is 10 years. The buildings and equipment are expected to last 12 more years on average. Symbol paid dividends of $18,000 during 20x2 and reported net income of $82,000 for the year. Required: Compute the amount of investment income (loss) reported by Peace from its investment in Symbol for 20X2 and the balance in the investment account on December 31, 20X2, assuming the equity method is used in accounting for the investment. Note: If a loss occurs, enter the amount as a negative number.
Peace Company issued common shares with a par value of $58,000 and a market value of $165,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable SYMBOL CORPORATION Balance Sheet January 1, 20X2 Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities. Book Value Fair Value $ 57,000 $ 57,000 97,000 97,000 133,000 55,000 505,000 (245,000) Investment income (loss) Balance in the investment account $ 602,000 $ 22,000 172,000 148,000 12,000 248,000 $ 602,000 163,000 70,000 326,000 32,000 $ 745,000 $ 22,000 172,000 The estimated economic life of the patents held by Symbol is 10 years. The buildings and equipment are expected to last 12 more years on average. Symbol paid dividends of $18,000 during 20x2 and reported net income of $82,000 for the year. Required: Compute the amount of investment income (loss) reported by Peace from its investment in Symbol for 20X2 and the balance in the investment account on December 31, 20X2, assuming the equity method is used in accounting for the investment. Note: If a loss occurs, enter the amount as a negative number.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Peace Company issued common shares with a par value of $58,000 and a market value of $165,300 in
exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following
balances on that date:
Assets
Cash
Accounts Receivable
Inventory (FIFO basis)
Land
Buildings & Equipment
Less: Accumulated Depreciation
Patent
Total Assets
Liabilities & Equities
Accounts Payable
SYMBOL CORPORATION
Balance Sheet
January 1, 20X2
Bonds Payable
Common Stock
Additional Paid-In Capital
Retained Earnings
Total Liabilities & Equities
Book Value Fair Value
$ 57,000 $ 57,000
97,000
97,000
133,000
163,000
55,000
70,000
505,000
326,000
(245,000)
Investment income (loss)
Balance in the investment account
$ 602,000
$ 22,000
172,000
148,000
12,000
248,000
$ 602,000
32,000
$ 745,000
$ 22,000
172,000
The estimated economic life of the patents held by Symbol is 10 years. The buildings and equipment are
expected to last 12 more years on average. Symbol paid dividends of $18,000 during 20x2 and reported net
income of $82,000 for the year.
Required:
Compute the amount of investment income (loss) reported by Peace from its investment in Symbol for 20X2
and the balance in the investment account on December 31, 20X2, assuming the equity method is used in
accounting for the investment.
Note: If a loss occurs, enter the amount as a negative number.
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