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Suppose that on January 6, 2018, Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Excel has significant influence over Dynamic after the purchase. Assume Dynamic earned net income of $10,000,000 and paid cash dividends of $15,000,000 to all outstanding stockholders during 2018. (Assume all outstanding stock is voting stock.) Read the requirements. Requirement 1. What method should Excel Motors use to account for the investment in Dynamic Motors? Give your reasoning. Excel Motors should use the method to account for its investment in Dynamic Motors because the investment Requirement 2. Journalize all required 2018 transactions related to Excel Motors's Dynamic investment. Include an explanation for each entry. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, enter "No entry required" on the first line of the Accounts and Explanation column and leave the remaining cells blank. Check your spelling carefully and do not abbreviate.) Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Date 2018 Jan. 6 Accounts and Explanation Debit Credit Dynamic paid cash dividends of $15,000,000 to all outstanding shareholders during 2018. Date 2018 Accounts and Explanation Debit Credit Dynamic earned net income of $10,000,000 during 2018. Date 2018 Accounts and Explanation Debit Credit Requirement 3. Post all 2018 transactions to the investment T-account. What is its balance after all the transactions are posted? How would this balance be classified on the balance sheet dated December 31, 2018? Begin by selecting the investment account and posting the 2018 transactions to the investment T-account. Calculate the balance after all the transactions are posted. How would this balance be classified on the balance sheet dated December 31, 2018? This balance would be classified as on the balance sheet dated December 31, 2018.

Suppose that on January 6, 2018, Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Excel has significant influence over Dynamic after the purchase. Assume Dynamic earned net income of $10,000,000 and paid cash dividends of $15,000,000 to all outstanding stockholders during 2018. (Assume all outstanding stock is voting stock.) Read the requirements. Requirement 1. What method should Excel Motors use to account for the investment in Dynamic Motors? Give your reasoning. Excel Motors should use the method to account for its investment in Dynamic Motors because the investment Requirement 2. Journalize all required 2018 transactions related to Excel Motors's Dynamic investment. Include an explanation for each entry. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, enter "No entry required" on the first line of the Accounts and Explanation column and leave the remaining cells blank. Check your spelling carefully and do not abbreviate.) Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Date 2018 Jan. 6 Accounts and Explanation Debit Credit Dynamic paid cash dividends of $15,000,000 to all outstanding shareholders during 2018. Date 2018 Accounts and Explanation Debit Credit Dynamic earned net income of $10,000,000 during 2018. Date 2018 Accounts and Explanation Debit Credit Requirement 3. Post all 2018 transactions to the investment T-account. What is its balance after all the transactions are posted? How would this balance be classified on the balance sheet dated December 31, 2018? Begin by selecting the investment account and posting the 2018 transactions to the investment T-account. Calculate the balance after all the transactions are posted. How would this balance be classified on the balance sheet dated December 31, 2018? This balance would be classified as on the balance sheet dated December 31, 2018.

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter12: Valuation: Cash-flow Based Approaches
Section: Chapter Questions
Problem 1LIC
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Suppose that on January 6, 2018, Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Excel has significant influence over Dynamic after the purchase. Assume Dynamic earned net income of $10,000,000 and paid cash dividends of $15,000,000 to all outstanding stockholders during 2018. (Assume all outstanding stock is voting stock.) Read the requirements. Requirement 1. What method should Excel Motors use to account for the investment in Dynamic Motors? Give your reasoning. Excel Motors should use the method to account for its investment in Dynamic Motors because the investment Requirement 2. Journalize all required 2018 transactions related to Excel Motors's Dynamic investment. Include an explanation for each entry. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, enter "No entry required" on the first line of the Accounts and Explanation column and leave the remaining cells blank. Check your spelling carefully and do not abbreviate.) Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Date 2018 Jan. 6 Accounts and Explanation Debit Credit Dynamic paid cash dividends of $15,000,000 to all outstanding shareholders during 2018. Date 2018 Accounts and Explanation Debit Credit
Transcribed Image Text:Suppose that on January 6, 2018, Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Excel has significant influence over Dynamic after the purchase. Assume Dynamic earned net income of $10,000,000 and paid cash dividends of $15,000,000 to all outstanding stockholders during 2018. (Assume all outstanding stock is voting stock.) Read the requirements. Requirement 1. What method should Excel Motors use to account for the investment in Dynamic Motors? Give your reasoning. Excel Motors should use the method to account for its investment in Dynamic Motors because the investment Requirement 2. Journalize all required 2018 transactions related to Excel Motors's Dynamic investment. Include an explanation for each entry. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, enter "No entry required" on the first line of the Accounts and Explanation column and leave the remaining cells blank. Check your spelling carefully and do not abbreviate.) Excel Motors paid $240,000,000 for its 45% investment in Dynamic Motors. Date 2018 Jan. 6 Accounts and Explanation Debit Credit Dynamic paid cash dividends of $15,000,000 to all outstanding shareholders during 2018. Date 2018 Accounts and Explanation Debit Credit
Dynamic earned net income of $10,000,000 during 2018. Date 2018 Accounts and Explanation Debit Credit Requirement 3. Post all 2018 transactions to the investment T-account. What is its balance after all the transactions are posted? How would this balance be classified on the balance sheet dated December 31, 2018? Begin by selecting the investment account and posting the 2018 transactions to the investment T-account. Calculate the balance after all the transactions are posted. How would this balance be classified on the balance sheet dated December 31, 2018? This balance would be classified as on the balance sheet dated December 31, 2018.
Transcribed Image Text:Dynamic earned net income of $10,000,000 during 2018. Date 2018 Accounts and Explanation Debit Credit Requirement 3. Post all 2018 transactions to the investment T-account. What is its balance after all the transactions are posted? How would this balance be classified on the balance sheet dated December 31, 2018? Begin by selecting the investment account and posting the 2018 transactions to the investment T-account. Calculate the balance after all the transactions are posted. How would this balance be classified on the balance sheet dated December 31, 2018? This balance would be classified as on the balance sheet dated December 31, 2018.
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