Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 10, Problem 7RQ
What method is used for investments in equity securities with 20% to 50% ownership? Briefly describe how dividends declared and received and share of net income are reported.
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Students have asked these similar questions
For investments in equity securities, which will result in recording income based on the
income of the investee?
Select one:
a. Held-to-maturity classification
b. Trading classification
O C. Available-for-sale classification
O d. Equity method of accounting
what is evaluate the accounting for investments when holding between 20 and 50% of equity securities of an investee from the view of an analyst of financial statements?
How would the share dividends distributable account balance be presented on the statement of financial position? *
a. as part of current liabilities
b. as addition to share capital
c. as addition to retained earnings
d. as addition to additional paid in capital
Chapter 10 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
Ch. 10 - Prob. 1QCCh. 10 - Which of the following investments is most likely...Ch. 10 - If Intervale Railway invests 100,000 in 5% bonds...Ch. 10 - Prob. 4QCCh. 10 - Prob. 5QCCh. 10 - Prob. 6QCCh. 10 - Prob. 7QCCh. 10 - Harvard Co. purchased a trading investment on...Ch. 10 - Prob. 9QCCh. 10 - Prob. 10QC
Ch. 10 - What is a debt security?Ch. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Briefly describe the five specific types of debt...Ch. 10 - How is the purchase of a held-to-maturity debt...Ch. 10 - Prob. 6RQCh. 10 - What method is used for investments in equity...Ch. 10 - What method is used for investments in equity...Ch. 10 - What adjustment must be made at the end of the...Ch. 10 - Where on the financial statements is an unrealized...Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - What does the rate of return on total assets...Ch. 10 - Identifying why companies invest and classifying...Ch. 10 - Prob. 10.2SECh. 10 - Prob. 10.3SECh. 10 - Accounting for equity method On January 1, 2016,...Ch. 10 - Accounting for trading investments On February 1,...Ch. 10 - Prob. 10.6SECh. 10 - Computing rate of return on total assets Kabra's...Ch. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Accounting for bond investments Otter Creek Co....Ch. 10 - Accounting for stock investments Dollar Bill...Ch. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Accounting for stock investments Suppose that on...Ch. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - A Accounting for bond investments Suppose Jenner...Ch. 10 - Prob. 10.18APCh. 10 - Accounting for stock investments The beginning...Ch. 10 - Accounting for bond investments Suppose Ritter...Ch. 10 - Classifying and accounting for stock investments...Ch. 10 - Accounting for stock investments The beginning...Ch. 10 - Prob. 10.23CPCh. 10 - Prob. 10.1CTEICh. 10 - Wild Adventure conducts tours of wildlife reserves...Ch. 10 - Prob. 10.1CTFSCCh. 10 - Prob. 10.1CTTPCh. 10 - In 150 words or fewer, explain the difference...
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- How is treasury stock reported on the balance sheet? Select one: Investment Contra asset Current asset Reduction of stockholders' equityarrow_forwardCapital structure refers to Select one: a. Total assets minus Liabilities b. Shareholders' equity c. Long-term debt, preferred stock, and common stock equity d. Current assets and Current liabilitiesarrow_forwardIndicate how each of the following accounts should be classified in the equity section.(a) Share Capital—Ordinary. (e) Share Premium—Treasury.(b) Retained Earnings. (f) Share Capital—Preference.(c) Share Premium—Ordinary. (g) Accumulated Other Comprehensive Income.(d) Treasury Shares.arrow_forward
- Calculate the following ratios based on the balance sheet, income statement and cash flow prepared in question ROE Return on Capital Employed (post-tax) Net Profit Margin EBITDA Margin Effective Tax Rate Operating Cost Ratio Gross Profit Margin Total Asset Turnover Ratio Fixed Asset Turnover Ratio Receivables Turnover Ratio Leverage Ratio [Avg. Total Assets / Avg. Total Equity] FCF / EBITDA Interest Coverage Ratio Debt Service Coverage Ratio Basic EPS (Assume Face Value of each share is INR 10) Debt : Equity Ratio Income Statement (INR Cr) Units Mar/14 Saleable Units 4,570 Revenues Gross Revenues INR Cr 2,116 Less: Environment Cess INR Cr 5 Net Revenues INR Cr 2,121 Growth (%) -1.9% Expenses O&M Expenses (% of Project Costs) INR Cr 146 YoY Escalation 5.72% EBITDA INR Cr 1,974 Margin (%) 93.1% Book Depreciation INR Cr 439 Interest Expenses INR…arrow_forwardThe equity method of accounting for investments requires a.the investment to be increased by the reported net income of the investee b.the investment to be reported at its original cost c.a year-end adjustment to revalue the stock to lower of cost or market d.the investment to be increased by the dividends paid by the investeearrow_forwardWhat are the distributions to the stockholders by a firm called? A. retained earningsB. net incomeC. dividendsD. capital paymentsarrow_forward
- Stockholders’ equity consists of which of the following?A. bonds payableB. retained earnings and accounts receivableC. retained earnings and paid-in capitalD. discounts and premiums on bond payablearrow_forwardStock subscriptions receivable are listed as __________ on the balance sheet. (a) current liabilities (b) current assets (c) long-term assets (d) contra-stockholders equityarrow_forwardDemonstrate how to identify and account for equity investments accounted forunder the equity methodarrow_forward
- 1. It represents the cumulative balance of periodic earnings, dividend distributions, prior period adjustments and other capital adjustments. a. Income summaryb. net incomec.dividends d. accumulated profits 2. The date on which liability for dividends must be recorded a. Date of recordb.Date of issuance c.Date of payment d. Declaration date 3. The amount attributable to every share of ordinary share capital outstanding during the period. a. Par value b. Stated value c. Carrying value d. Bookvalue 4. The date which determines who gets the dividend a. Date of payment b. Date of declaration c. Date of record d. Date of issuance 5. How is the treasury share account presented in the Statement of Financial Position? a. deducted from accumulated profitsb. deducted from shareholders’ equityc. part of reservesd. current assetarrow_forwardMatch each ratio that follows to its use. Items may be used more than once. Indicate the extent to which earnings are being distributed to common stockholders Indicate the ability to pay current liabilities Assess the profitability of the investment by common stockholders Assess how effectively assets are used Earnings per share (EPS) on common stock Return on common stockholders' equity Current ratio Dividends per share Asset turnover ratioarrow_forwardThe return on equity is calculated using which of the following formulas? Multiple Cholce Net Income - Common Stock Net Income + Retalned earnings Net Income + Stockholders' equity Net Income - Average stockholders' equityarrow_forward
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