Smith, Inc. has maintained an ownership interest in Watts Corp. for a number of years. This investment has been accounted for using the equity method. What transactions or events create changes in the Investment in Watts Corporation account being recorded by Smith?
Q: The account Valuation Allowance for Investments in Common Stock is included on the: A. statement of…
A: As investment in common stock is a part of stockholder equity, due to this reason, valuation…
Q: Tamarisk Company obtained land by issuing 2,950 shares of its $10 par value common stock. The land…
A: JOURNAL ENTRIESJournal Entry is the first stage of Accounting Process. Journal Entry is the Process…
Q: Which group of items would most likely be included in the other assets account on the balance…
A: Other Assets - Other Assets are the assets section of the balance sheet assets side. It is generally…
Q: Flounder Corporation purchased for $325,000 a 25% interest in Murphy, Inc. This investment enables…
A: Percentage of investment in Murphy Inc=25%Net income of Murphy Inc=$183000Dividend paid by Murphy…
Q: Below is a list of activities for Jayhawk Corporation.Required: For each activity, indicate whether…
A: Accounting equation: Accounting equation is an accounting tool expressed in the form of equation,…
Q: Riggins Company accounts for its investment in Bostic Company using the equity method. During the…
A: The way in which the other comprehensive income affect the investor's financial records: The…
Q: Herbst Enterprises purchased equity securities in Year 1 and classified them as available-for-sale.…
A: Herbst Enterprises does NOT need to report the realized gain as dividend revenue or restate the Year…
Q: An investment in an associate is normally accounted for using the equity accounting method. This…
A: Whenever investor invests in shares and stock of other company, then ownership rights can be 20%,…
Q: This period, Amadeus Co. purchased its only available-forsale investment in the notes of Bach Co.…
A: Investments are classified as Available for sale when such investments held by the company with a…
Q: In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the…
A: Journal entry is the first stage of the accounting process.Journal entries are used to record…
Q: Bright Ltd has a 60% subsidiary Sharp Ltd and a 30% associate Able Ltd and is producing its…
A: According to the given question, we are required to prepare the statements as required.…
Q: Smith, Inc., has maintained an ownership interest in Watts Corporation for a number of years. This…
A: Equity method: Equity method is the method used for accounting equity investments which claim a…
Q: Analyzing and Interpreting Disclosures on Equity Method Investments Cummins, Inc. (CMI) reports…
A: ssets and liabilities are fundamental concepts in accounting and finance:Assets:Assets are resources…
Q: The Crump Companies, Inc., has ownership interests in several public companies. At the beginning of…
A:
Q: On January 1, 2023, AMI Corporation purchased the non-cash net assets of Sheffield Ltd. for…
A: Journal entryA journal entry is a method of recording transactions in the book of original entry by…
Q: Assume these are the only securities Martin owns and that the company accounts for them as trading…
A: Net income is the income which is chargeable to tax for income tax purposes. In the instant case,…
Q: The balance sheet identity refers to the fact that A.) Current Assets and Current Liabilities must…
A: The financial statements of the business includes balance sheet and income statement.
Q: The following transactions relate to Brown Company’s long-term investments. Brown did not own any…
A: 09.09.2019, Purchased 1000 shares = $80000 cash Journal entry will be Investments Packard common…
Q: Hawkins Company has owned 10 percent of Larker, Inc., for the past several years. This ownership did…
A: Equity method: Equity method is the method used for accounting equity investments which claim a…
Q: Fill in the blanks for the missing elements in the following three statements: Corporation…
A: Retained earnings accounts refer to the form of account that reflects the sum value of money…
Q: The equity method of accounting for investments requires a.the investment to be increased by the…
A:
Q: Assets Б each
A: The right answer is option c Assets must equal Liabilities plus Shareholders' Equity.
Q: Sage Corporation purchased for $319,000 a 30% interest in Murphy, Inc. This investment enables Sage…
A: In a regular basis, journal entries are how purchases are reported in the company's accounts. Any…
Q: Which of the following items has no effect on the Accumulated Adjustments Account (AAA) of an S…
A: Cost of goods sold- The cost of goods sold is the cost of producing the goods that a business sells.…
Q: The following item is not a debt: Dividends payable in shares. Advances paid by clients on…
A: Solution a: Dividend payable in shares is not a debt instead same is part of shareholder's equity.…
Q: Highland Industries Inc. makes investments in avaialable-for-sale securities. Selected income…
A: b=Retained Earning of Year 2-Retained Earning of Year 1=$220,000-$175,400=$44,600 a=Net Income of…
Q: At the beginning of 2016, Pioneer Products’ ownership interest in the common stock of LLB Co.…
A:
Q: This comment appeared in the annual report of Mac-Cloud Inc.: “The Company could pay cash or…
A: Definition:
Q: Highland Industries Inc. makes investments in available-for-sale securities. Selected income…
A: Available-for-sale securities: These are short-term or long-term investments in debt and equity…
Q: The following transactions affect the Statement of Changes in Equity except:
A: A statement of changes in the equity is the statement which shows and reflects all the items by…
Q: Classifying balance sheet accounts For each account listed, identify the category that it would…
A: Current assets: Current assets are those assets owned by the company that can be convertible into…
Q: A company, accounting for an equity investment under the equity method, is preparing its income…
A: The uniting of two or more independent entities to create a single economic entity is referred to as…
Q: Use the adjusted trial balance of Lash Corporation below to prepare a classified balance sheet,…
A: Financial statements for 12/31/25 Balance sheet Income statement Statement of comprehensive…
Q: This comment appeared in the annual report of MacCloud Inc.: “The Company could pay cash or property…
A:
Q: The following events are for King Investment Inc.: 2020 Feb. 25 Purchased 196,980 shares of Jack…
A: Journal entries are prepared to record the transactions in the primary books of account showing the…
Q: The Trump Companies, Inc., has ownership interests in several public companies. At the beginning of…
A: Calculate the amount of equity investment.
Q: Pledged Assets : Plant, property, and equipment (PPE) Merchandise inventory Free assets Total assets…
A: Estimated recovery value is also written as ERV. It is the amount which is to be recovered by…
Q: Under the equity method of accounting for investments, which of the following statements is true? a)…
A: The correct answer is d) The investor has significant influence over the investee.Explanation:Under…
Q: Nash Company obtained land by issuing 2,270 shares of its $10 par value common stock. The land was…
A: Land is purchased against stock issued for consideration other than cash.JOURNAL ENTRIESJournal…
Q: Fill in the dollar chargis caused in the Investment account and Dividend Revenue or Investment…
A: Fair market value (FMV) is a gauge of the market estimation of a property, in view of what a…
Q: tement of changes in owners equity summarizes the effects on the capital account of the various…
A: Solution: The statement of changes in owners equity represents the changes in balance of equity from…
Q: Which of the following accounts would not be reported in the “Other Expenses and Losses” section of…
A: The objective of the question is to identify which among the given accounts would not be reported…
Q: Concord Corporation purchased for $285,000 a 25% interest in Murphy, Inc. This investment enables…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Step by step
Solved in 3 steps
- Common categories of a classified balance sheet include Current Assets, Long-Term Investments, Plant Assets, Intangible Assets, Current Liabilities, Long-Term Liabilities, and Equity. For each of the following items, identify the balance sheet category where the item typically would best appear. If an item does not appear on the balance, indicate that instead. Account Title 1. Notes receivable (due in 2 years) 2. Trademarks 3. Cash 4. Patents 5. Interest receivable 6. Machinery 7. Prepaid rent (2 months of Rent) 8. Equipment 9. Repairs expense 10. Land Classification Account Title 11. Depreciation expense Building 12. Office equipment 13. Prepaid Insurance (expires in 5 months) 14. Buildings 15. Bonds payable (due in 10 years) 16. Trucks 17. Mortgages payable (due in 6 years) 18. Automobiles 19. Notes payable (due in 3 years) 20. Utilities expense Classificationhow much is the investment income to be reported by Nezuko Company in relation to the joint venture? how much is the share in other comprehensive income of Kamado company to be presented in the 2021 financial statements of Nezuko Company? how much is the dividend income to be reported by Nezuko company?Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Ayayai Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Sunland Company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for amounts.) (a) Fair Value Method (b) Equity Method Transaction Investment Account Dividend Revenue Investment Account Investment Revenue 1. At the beginning of Year 1, Ayayai bought 30% of Sunland's common stock at its book value. Total book value of all Sunland's common stock was $760,000 on this date. 2. (a) During Year 1, Sunland reported $52,000 of net income. (b) During Year 1, Sunland paid $28,500 of dividends. 3. (a) During Year 2, Sunland reported…
- Which of the following financial statements would be improperly prepared as part of the annual 10K report filed with the Securities and Exchange Commission? O Current and Prior Year Balance Sheet. Current and Prior Year Cash Flows Statement. Current and Prior Two Years Income Statement. Current and Prior Two Years Statement of Stockholders' Equity.Below is a list of activities for Tigers Corporation.Required: For each activity, indicate whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders’ equity.8. Realized gains and losses on investments available for sale are reported a. as a current assetb. on the income statementc. on the balance sheet as part of stockholders' equityd. as a contra asset
- Pronghorn Corporation purchased for $ 322,000 a 30% interest in Murphy, Inc. This investment enables Pronghorn to exert significant influence over Murphy. During the year, Murphy earned net income of $ 183,000 and paid dividends of $ 60,000.Prepare Pronghorn’s journal entries related to this investment. (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 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record the purchase enter a debit amount enter a credit amount enter an account title to record the purchase enter a debit amount enter a credit amount (To record the purchase.) enter an account title to record the net income enter a debit amount enter a credit amount enter an account title to record the net income enter a debit amount enter a credit amount (To record the…View previous attempt On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the open market in exchange for $16,200. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $96,750. During the next two years, the following information is available for Zip Company: Common Stock Fair Value 2019 2020 2021 Income Dividends Declared $69,000 $7,100 89,000 14,700 (12/31) $324,000 387,000 477,000 Check my work At December 31, 2020, Zip reports a net book value of $289,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2020, a. Assume Akron applies the equity method to its Investment in Zip account 1. What amount of equity income should Akron report for 2021? 2. On Akron's December 31, 2021, balance sheet, what amount is reported for the Investment in…Carlin Enterprises purchased 2,000 shares of the 2,000,000 common shares outstanding in Captain Inc. Carlin intends to hold on to this investme for the foreseeable future. How should this investment be classified on the books of Carlin? O trading equity investment O held-to-maturity debt investment O held-to-maturity equity investment O available-for-sale equity investment Question 23 Held-to-maturity securities O affects other comprehensive income and appear as financing activities on the statement of cash flows. are never disclosed in the notes to financial statements
- Dot’s Delicious Donuts has the following accounts on its balance sheet: 1) Current assets. 2) Property, plant, and equipment (PP&E) 3) Intangible assets. 4) Other assets. 5) Current liabilities. 6) Deferred federal income taxes. 7) Long-term debt. 8) Stockholder’s equity. Using the above categories, how would each of the following items be classified: a) Land held for speculation. b) Current maturities on mortgage. c) Common stock. d) Mortgage payable. e) Balances outstanding on credit sales to customers f) Accumulated depreciation g) Buildings used in business h) Accrued payroll i) Preferred stock j) Debt outstanding from credit extended by suppliers k) Patents l) Land on which warehouse is located m) Allowance for doubtful accounts n) Liability due to differences in taxes paid and taxes reported o) Additional paid in capitalThe Carrefour Group reported the following description of its available-for-sale investments. Assets available for sale are . . . valued at fair value. Unrealized . . . gains or losses are recorded as shareholders’ equity until they are sold. In a recent year, Carrefour’s financial statements reported €18 million in net unrealized losses (net of unrealized gains), which are included in the fair value of its available-for-sale securities reported on the balance sheet. 1. What amount of the €18 million net unrealized losses, if any, is reported in the income statement? Explain. 2. If the €18 million net unrealized losses are not reported in the income statement, in which statement are they reported, if any? Explain.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?