Peace Company issued common shares with a par value of $59,000 and a market value of $159,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: SYMBOL CORPORATION Balance Sheet January 1, 20x2 Book Value Fair Value Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 57,000 $ 57,000 86,000 86,000 137,000 167,000 59,000 74,000 505,000 (245,000) 328,000 33,000 $ 599,000 $ 745,000 $ 22,000 $ 22,000 192,000 192,000 137,000 11,000 237,000 $ 599,000 The estimated economic life of the patents held by Symbol is 4 years. The buildings and equipment are expected to last 6 more years on average. Symbol paid dividends of $15,000 during 20X2 and reported net income of $87,000 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. Answer is complete but not entirely correct. Investment income (loss) $ 5,775 Balance in the investment account $ 160,575
Peace Company issued common shares with a par value of $59,000 and a market value of $159,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: SYMBOL CORPORATION Balance Sheet January 1, 20x2 Book Value Fair Value Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 57,000 $ 57,000 86,000 86,000 137,000 167,000 59,000 74,000 505,000 (245,000) 328,000 33,000 $ 599,000 $ 745,000 $ 22,000 $ 22,000 192,000 192,000 137,000 11,000 237,000 $ 599,000 The estimated economic life of the patents held by Symbol is 4 years. The buildings and equipment are expected to last 6 more years on average. Symbol paid dividends of $15,000 during 20X2 and reported net income of $87,000 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. Answer is complete but not entirely correct. Investment income (loss) $ 5,775 Balance in the investment account $ 160,575
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Peace Company issued common shares with a par value of $59,000 and a market value of $159,300 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
SYMBOL CORPORATION
Balance Sheet
January 1, 20X2
Book Value Fair Value
$ 57,000
86,000
137,000
$ 57,000
86,000
167,000
59,000
74,000
505,000
328,000
(245,000)
33,000
Less: Accumulated Depreciation
Patent
Total Assets
Liabilities & Equities
Accounts Payable
Bonds Payable
Common Stock
Additional Paid-In Capital
Retained Earnings
Total Liabilities & Equities
$ 599,000 $ 745,000
$ 22,000
192,000
137,000
11,000
237,000
$ 599,000
$ 22,000
192,000
The estimated economic life of the patents held by Symbol is 4 years. The buildings and equipment are expected to last 6 more years
on average. Symbol paid dividends of $15,000 during 20X2 and reported net income of $87,000 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.
Answer is complete but not entirely correct.
Investment income (loss)
$ 5,775
Balance in the investment account
$ 160,575
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education