Pine Company makes an investment in Holt Company, Journalize the following transactions assuming that Pine Company uses (a) thę fair value method and (b) the equity method for its investment in Holt Company: 1) On Jan. 1, 2017, Pine bought 30% of Holt's common stock. Total book value of all Holt's common stock was $800,000 on this date. www nm 2) During 2017, Holt reported $40,000 of net income. 3) During 2017, Holt paid $20,000 of dividends

Pine Company makes an investment in Holt Company, Journalize the following transactions assuming that Pine Company uses (a) thę fair value method and (b) the equity method for its investment in Holt Company: 1) On Jan. 1, 2017, Pine bought 30% of Holt's common stock. Total book value of all Holt's common stock was $800,000 on this date. www nm 2) During 2017, Holt reported $40,000 of net income. 3) During 2017, Holt paid $20,000 of dividends

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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CASE 2 (QS 15-16): On January 1, 2012, Fernando Co. acquired all of the common stock of Harvey Corp. For 2012, Harvey earned net income of $360,000 and paid dividends of $190,000. Amortization of the patent allocation that was included in the acquisition was $6,000. Question 15 How much difference would there have been in Fernando's income with regard to the effect of the investment, between using the equity method or using the initial value method of internal recordkeeping? A) $190,000. B) $360,000. C) $164,000. D) $354,000. E) $150,000. How much difference would there have been in Fernando's income with regard to the effect of the investment, between using the equity method or using the partial equity method of internal recordkeeping? A) $170,000. B) $354,000. C) $164,000. D) $ 6,000. E) $174,000.
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(Equity Investments) Castleman Holdings, Inc. had the following equity investment portfolio at January 1, 2017. Evers Company 1,000 shares @ $15 each $15,000 Rogers Company 900 shares @ $20 each 18,000 Chance Company 500 shares @ $9 each 4,500 Equity investments @ cost 37,500 Fair value adjustment (7,500) Equity investments @ fair value $30,000 During 2017, the following transactions took place.1. On March 1, Rogers Company paid a $2 per share dividend.2. On April 30, Castleman Holdings, Inc. sold 300 shares of Chance Company for $11 per share.3. On May 15, Castleman Holdings, Inc. purchased 100 more shares of Evers Company stock at $16 per share.4. At December 31, 2017, the stocks had the following price per share values: Evers $17, Rogers $19, and Chance $8.During 2018, the following transactions took place.5. On February 1, Castleman Holdings, Inc. sold the remaining Chance shares for $8 per share.6. On March 1, Rogers Company paid a $2 per share dividend.7. On…
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Prepare the journal entries for an investment accounted for under the equity method. a. On January 2, 2017, Workowski Corporation purchased 55,000 shares (26%) of Wendy Company at a cost of $8 per share. b. At the end of 2017, Wendy Company reported net income of $350,000 (Workowski’s share is 26%). c. Wendy Company reported a $215,000 net loss for 2017. Workowski’s share of the loss is 26%. d. In early 2018, Wendy Company paid a $75,000 dividend. Workowski’s share is 26%.
Presented below is information relating to the purchase of common stock by Jamison Company December 31, 2016. Cost Fair Value Investment in Readfield Company common stock $125,000 $115,500 Investment in Lee Company common stock $100,000 $ 80,000 Investment in Stern Company common stock $250,000 $300,000 Investment in Jones Company common stock $180,000 $190,000 $655,000 $685,500 These investments are classified as trading security by Jamison who uses portfolio approach to account for those investments. During the year 2017, Lee Company’s stock was sold for $102,000. Jamison purchased common…
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