QUESTION 3 Kanta Industries purchased 25% (a significant influence) of Reagan's 100,000 outstanding shares of common stock for $9/share on January 1, 2023. On June 15, Reagan declared and paid a cash dividend of $1 per share. Reagan reported net income of $285,000 on December 31, 2023. The Fair Value of Reagan's common stock was $12/share on Decrember 31, 2023. Prepare ALL necessary journal entries for 2023 for Kanta Industries.
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- Cary Corporation has 50,000 shares of 10 par common stock authorized. The following transactions took place during 2019, the first year of the corporations existence: Sold 5,000 shares of common stock for 18 per share. Issued 5,000 shares of common stock in exchange for a patent valued at 100,000. At the end of Carys first year, total contributed capital amounted to: a. 40,000 b. 90,000 c. 100,000 d. 190,000Question 5 On January 2, 2020, Theodora Company purchased 40,000 shares of Byzantine, Inc. stock at P100 per share. Brokerage fees amounted to P120,000. A P5 dividend per share of Byzantine, Inc. shares had been declared on December 15, 2019, to be paid on March 31, 2020 to shareholders of record on January 31, 2020. The shares are designated as FVTOCI. On December 31, 2020 the investment has a fair value of P4,200,000. How much should be recognized in the 2020 other comprehensive income related to these securities? Group of answer choices P400,000 P200,000 P80,000 P280,000Question 6 On June 1, 2020, Ping Corp. purchased 10,000 of Pong’s 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong’s shares was P6.50 per share on December 31, 2020. Which statement is correct? Group of answer choices Assuming that the investment is FVTOCI, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P7,500. Assuming that the investment is an associate, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P3,600. After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches. Assuming that the investment is FVTPL, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P2,500.
- Problem 3 On January 1, 2021, CPA Co. acquired 15,000 ordinary shares out of 100,000 outstanding ordinary shares of PLDT Inc. for P300,000. The book value of the net asset of PLDT is the same with its fair value. During 2021, PLDT declared P2 per share cash dividend. The net income of PLDT for 2022 is P400,000. On January 1, 2022, CPA Co. acquired additional 5,000 ordinary shares of PLDT Inc. As a result, the cost method of accounting for investment should be replaced by the equity method on January 1, 2022. _2. What is the cumulative effect of this accounting change to January 1, 2022 Retained Earnings assuming income tax rate is 30%? Indicate whether debit or credit.View previous attempt Check my On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $295,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $26,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $11,500 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Items Presidio Company Cash $ 63,000 Mason Company $ 29,200 Land Receivables Inventory Buildings (net) 306,000 189,000 426,000 168,000 207,000 213,000 484,000 237,000 Equipment (net) 167,000 73,800 Accounts payable Long-term liabilities (221,000) (62,700) (444,000) (295,000) Common stock-$1 par value (110,000) 0 5 Common stock-$20 par value 0 (120,000) Additional paid-in capital Retained earnings, 1/1/24 (360,000)…Problem 18-6 (AICPA Adapted) On July 1, 2022, Diamond Company paid P1,000,000 for 100,000 outstanding shares which represent 40% of Silvo Company. At that date, the net assets of Silver Company totaled P2,500,000 and the fair values of all of Silver Company's identifiable assets and liabilities were equal to their carrying amount. The investee reported net income of P500,000 for 2022, of which P300,000 was for the six months ended December 31. 2022. The investee paid cash dividend of P250,000 on September 30, 2022. What amount should be reported as carrying amount of the investment in associate on December 31, 2022? a. 1,120,000 b. 1,200,000 C. 1,020,000 d. 1,100,000
- Situation 1 Tamarisk Tables acquired 15% of the 5,100,000 shares of common stock of Robot Sofas at a total cost of $8.80 per share on April 1, 2020. On August 8, Robot Sofas declared and paid a $263,000 cash dividend. On December 31, Robot Sofas market price was $9 per share and the company reported net income of $743,000 for the year. The securities are classified as available-for-sale. Situation 2 On January 1, 2020, Vaughn Company purchased 40% of Santos Corporation 465,000 outstanding shares of common stock at a total cost of $13 per share. On October 25, Santos declared and paid a cash dividend of $0.40 per share. On December 31, Santos reported a net income of $934,000 for the year and the market price of its common stock was $14 per share. Prepare all necessary journal entries in 2020 for both situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0…QUESTION 4 / Review Sunny Co purchased 20,000 shares in Peter Co on 1 August 2020 at a cost of $6.0 each. Transaction costs on the purchase amounted to $2,000. At the year-end 30 September 2021, these shares are now worth $7.50 each. What is the gain to be recognized for the year ended 30 Sep 2021 and where it will be recorded according to two cases: (1) Shares held for sales (2) Shares held to collect contractual cash flows and sell them.Case A: On January 1, 2021, your company purchased 60,000 shares of Freeze Company's $10 par common stock for $26 per share in cash plus paid $10,000 of broker's fees. On that date, Freeze Company's assets and liabilities had a book value equal to market value except for their building which had a market value which was $80,000 higher than its book value and had a 20-year remaining life. 2021 a. Purchased 60,000 shares of Freeze Company's $10 par common stock for $26 per share in cash plus paid $10,000 in broker's fees.. b. Received $30,000 in cash dividends. On December 31, 2021: 1. Freeze Company's stock had a market value of $25 per share. с. 2. Freeze Company reported net income of $400,000. 2022 d. Received a 10% stock dividend. On December 31, 2022: 1. Freeze Company's stock had a market value of $24 per share. е. 2. Freeze Company reported net income of $500,000. Assume the 60,000 shares you purchased represented 30% of the outstanding shares of Freeze Company so you were using…
- #13 YOO-YOO Company purchased 200 of the 1000 outstanding shares of WEBUL Company's common stock for $710000 on January 2, 2021. In 2021, WEBUL Company declared dividends of $155000 and reported earnings for the year of $510000.If YOO-YOO Company used the fair value method of accounting for its investment in WEBUL Company, its Equity Investments (WEBUL) account on December 31, 2021, should be $812000. $710000. $679000. $781000.Question 19 of 20 Fill in the blanks: Pink Co. purchased 20% of the shares of Red Co. for P4,000,000 on July 1, 2020 when the fair value of the net assets was P 20,000,000. Pink Co. has a significant influence over REd Co. Net income reported for the year 2020 is P3,000,000 while dividend paid was P1,900,000. Net income for the six months ended December 31, 2020 is P1,600,000, while dividend paid was P1,000,000. In the income statement of Pink Company for the year ended December 31, 2020, what amount of investment income should be reported? ( PreviousQuestion 7 During 2020, Crane Company purchased 91000 shares of Novak Corporation common stock for $1370000 as an equity investment. The fair value of these shares was $1299000 at December 31, 2020. Crane sold all of the Novak stock for $16 per share on December 3, 2021, incurring $67000 in brokerage commissions. Crane Company should report a realized gain on the sale of stock in 2021 of $86000. $19000. $157000. $90000.
