Pronghorn Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of itsexcess cash, Pronghorn purchased 150 common shares of AFS Corporation on July 1, 2023 at a price of $5 per share. Due to thenature of the investment, Pronghorn's management is accounting for the equity investment using the fair-value through othercomprehensive income (FV-OCI) without recycling to net income. On August 1, 2023, AFS declared dividends of $1/share, and paidthose dividends on August 20, 2023. On December 31, 2023, shares in AFS were trading at $7 per share. On September 15, 2024,Pronghorn sold the shares in AFS for $8 per share.Prepare the journal entries required to record the above transactions on the books of Pronghorn Ltd. (Credit account titles areautomatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.)DateAccount Titles and ExplanationDebitCredit

Journal Entries are posting of the accounting transactions made during the accounting period using…

Answered: Pronghorn Ltd. is a Canadian…

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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An acquiring company pays $45 million in cash, and issues new no-par stock with a fair value of $75 million, to the acquired company's former owners, for the assets and liabilities of the acquired company. Registration fees associated with the new stock issuance are $300,000, paid in cash. Consulting fees for the acquisition are $1 million, paid in cash. The fair value of the acquired company's identifiable net assets is $65 million. The entry or entries the acquiring company makes to record the acquisition have what net effect on its account balances? Select one: O A. Capital stock increases by $75 million. O B. Expenses increase by 1.3 million. C. Goodwill increases by $55 million. O D. Cash decreases by $46 million.
Since its incorporation in 2010, Park Inc. has qualifed as a CCPC. During the period since incor-poration until December 31, 2021, the company has had the following transactions that might involve the capital dividend account: 1. In 2012, the company sold depreciable property with an ACB of $225,000. It was the last property in its class and the balance in the class at the time of the sale was $129,600. The proceeds from the sale were $275,000. No additional property was purchased in 2012. 2. In 2014, the company received a capital dividend of $46,000. 3. In 2015, the company received life insurance proceeds, net of the adjusted cost basis of the policy, in the amount of $27,500. 4. In 2016, the company paid a capital dividend of $38,000 and eligible dividends of $19,000. The required election and designation was made. 5. In 2016, the company sold a parcel of land for $100,000. The ACB of this land was $145,000. 6. In January 2021, Park acquired all of the shares of a small…
Cheyenne Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Cheyenne purchased 130 common shares of AFS Corporation on July 1, 2023 at a price of $3 per share. Due to the nature of the investment, Cheyenne's management is accounting for the equity investment using the fair-value through other comprehensive income (FV-OCI) without recycling to net income. On August 1, 2023, AFS declared dividends of $2/share, and paid those dividends on August 20, 2023. On December 31, 2023, shares in AFS were trading at $5 per share. On September 15, 2024, Cheyenne sold the shares in AFS for $6 per share. Prepare the journal entries required to record the above transactions on the books of Cheyenne Ltd. (Credit account titles are automatically indented when the 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. List all debit…
Multi Computers plc is a large corporation operating in the computer hardware business. The company expressed interest in acquiring the shares of Compex plc, a smaller company in the same industry. Compex plc is listed on the Alternative Investment Market (AIM) and the profits on ordinary activities after tax for the past five years are as follows: £000 2014 210 2013 190 2012 200 2011 180 2010 170 Compex plc has paid dividends of £55,000 for each of the past five years and predicted that the dividends payment will increase by 3.5% over the next five years. The nominal value of Compex plc ordinary shares is £1 each, and its share price at 31st of December, 2014 was £2.50, and its P/E ratio was 8.55 times. Multi Computers plc’s profit after tax for 2014 was £5m, and its WACC was 5%. Its P/E ratio at 31st of December, 2014 was 10 times. An examination of the proposed acquisition has determined incremental cash flows, over and above that expected from the separate companies,…
Turner Company owns 10% of the outstanding shares of ICA Company. Turner has a choice to measure this investment (a) at fair value through profit or loss, (b) at fair value through other comprehensive income, or (c) using the equity method. During the current year, ICA paid a $5 million cash dividend on its shares. What effect did this dividend have on Turner's 2022 financial statements under each of the above bases of measurement? Explain the reasoning for this effect.
Page Ltd. is an investment management firm that had, at the beginning of the current year on January 1, 2021, a balance of $128,000 in its Trading Investments account (using the fair value through profit or loss model) and a balance of $485,000 in its Investment in Associates account (using the equity method). At the end of the year, these account balances were $147,000 and $577,000, respectively. During the year, dividends of $64,000 were received from associates while $9,000 was received from trading investments. In addition, the company purchased investments in associates and trading investments for cash of $115,000 and $55,000, respectively. Also, during 2021, the company received $43,000 when it sold trading investments that it carried at $27,000. (a) List the accounts that Page will show on its 2021 statement of income pertaining to its investments. Indicate vhere these accounts will appear on the statement of income. (Enter loss using either a negative sign preceding the number…
On January 1, 2021, DONNER Corporation purchased investment securities for ₱1,200,000. The securities are classified as trading. By December 31, 2021, the securities had a fair value of ₱1,680,000 but had not yet been sold. The company recognized a ₱320,000 restructuring charge during the year. The restructuring charge is composed of an impairment write-down on a manufacturing facility. Tax rules do not allow a deduction for the write-down unless the facility is actually sold. The facility was not sold by the end of the year. Excluding the trading securities and the restructuring the charge, income before taxes for the year was ₱4,000,000. The income tax rate for the current year and future years is 30%. What is DONNER's current tax expense?
Wickum Corporation reports under IFRS, and recognized a $500,000 impairment of an HTM debt investment in Right Corporation. Subsequently, the credit loss for Wickum’s investment decreased by $300,000. How would Wickum account for that change?
The Trump Companies Inc. has ownership interests in several public companies. At the beginning of 2016, the company’s ownership interest in the common stock of Milken Properties increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $31 million at the time of the change. Accountants working with company records determined that the balance would have been $48 million if the account had been adjusted for investee net income and dividends as prescribed by the equity method. Required: 1. Prepare the journal entry to record the change in principle. 2. Briefly describe other steps Trump should take to report the change. 3. Suppose Trump is changing from the equity method rather than to the equity method. How would your answers to requirements 1 and 2 differ?
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