Provide answer this financial accounting question Woolly Holdings Inc. purchased 12,000 shares of Everest Corporation stock in2014 for $50 per share and classified the investment as securities available forsale.•The market value of Everest's stock was $65 per share on December 31,2015.⚫ The market value was $90 per share on December 31, 2016.••During 2017, Woolly Holdings sold all of its Everest stock at $120 pershare.In its 2017 income statement, what amount would Woolly Holdings report asa realized gain?

Step 1: Definition of Realized GainA realized gain is the profit earned when an asset or investment…

Answered: Woolly Holdings Inc. purchased 12,000…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

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On December 31, 2016, Sannibel Company acquired a 20% interest in Edelweiss Company for $135,000. During 2017, Edelweiss had net income of $75,000 and paid a cash dividend of $30,000. If you applied the fair value method, what would be the debit balance in the Investment in Stock: Edelweiss Company account at the end of 2017?
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Adams Industries holds 40,000 shares of FedEx common stock. On December 31, 2015, and December 31, 2016, the market value of the stock is $95 and $100 per share, respectively. What is the appropriate reporting category for this investment and at what amount will it be reported in the 2016 balance sheet?
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Twist Corp. had no short-term investments prior to year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017. Apr. 16 Purchased 5,000 shares of Lafayette Co. stock at $26 per share. July 7 Purchased 3,500 shares of CVF Co. stock at $51 per share. 20 Purchased 1,600 shares of Green Co. stock at $18 per share. Aug. 15 Received an $1.20 per share cash dividend on the Lafayette Co. stock. 28 Sold 3,000 shares of Lafayette Co. stock at $29 per share. Oct. 1 Received a $3.30 per share cash dividend on the CVF Co. shares. Dec. 15 Received a $1.40 per share cash dividend on the remaining Lafayette Co. shares. 31 Received a $2.70 per share cash dividend on the CVF Co. shares.
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On December 31, 2016, Akron, Inc. purchased 5 Percent of Zip’s Company's common shares on the open market in exchange for $16,000. On December 31, 2017, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $95,000. During the next two years, the following information is available for Zip Company: Income Dividends Declared Common StockFair Value (12/31) 2016 $320,000 2017 $75,000 $7,000 380,000 2018 88,000 15,000 480,000 At December 31, 2017, Zip reports a net book value of $290,000. 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, 2017. Assume Akron applies the equity method to its Investment in Zip account: What amount of equity income should Akron report for 2018? On Akron's December 31, 2018, balance sheet, what amount is reported for the Investment in Zip…

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