Investment : The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment. Equity investments : The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments. Equity method : Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To Journalize : The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

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Answer 1

Question

Chapter 12, Problem 12.13P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.

Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To Journalize: The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

2.

To determine

To Prepare: The investment revenue account, for Company N.

3.

To determine

To Prepare: The investment account, of Company N in Company V.

4.

To determine

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

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Question 14 Last year Ryland acquired a 15% investment in Susan for GHS10,000 and that remains carried at cost in Ryland accounts. This investment now has a fair value of GHS30,000. Ryland has just made a further acquisition of 40% of the shares in Susan for GHS100,000. The net assets of Susan have now been determined at GHS60,000 and the fair value of the NCI at GHS80,000. Ryland has a policy of valuing the NCI at fair value at the date of acquisition. Required: Calculate the goodwill arising on the acquisition of Susan. Question 15 Truran, the parent, owns 80% of a subsidiary and the NCI in the subsidiary is currently measured at GHS100,000. Truran, the parent has just acquired all the remaining shares paying GHS90,000. Truran, the parent has acquired 5% of the shares reducing the NCI to 15% paying GHS80,000. Required: Calculate the difference arising that will be taken to equity in both situations.

pls answer and provide solution and explanation

Qw.14.

Answer 2

Question

Chapter 12, Problem 12.13P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.

Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To Journalize: The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

2.

To determine

To Prepare: The investment revenue account, for Company N.

3.

To determine

To Prepare: The investment account, of Company N in Company V.

4.

To determine

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

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Answer 3

Question

Chapter 12, Problem 12.13P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.

Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To Journalize: The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

2.

To determine

To Prepare: The investment revenue account, for Company N.

3.

To determine

To Prepare: The investment account, of Company N in Company V.

4.

To determine

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

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Answer 4

Question

Chapter 12, Problem 12.13P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.

Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To Journalize: The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

2.

To determine

To Prepare: The investment revenue account, for Company N.

3.

To determine

To Prepare: The investment account, of Company N in Company V.

4.

To determine

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

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Answer 5

Chapter 12, Problem 12.13P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.

Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To Journalize: The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

2.

To determine

To Prepare: The investment revenue account, for Company N.

3.

To determine

To Prepare: The investment account, of Company N in Company V.

4.

To determine

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

Answer 6

Chapter 12, Problem 12.13P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.

Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To Journalize: The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

Answer 7

Chapter 12, Problem 12.13P

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.

Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To Journalize: The entries related to the investments during 2018, for Company N assuming the investment is made under equity method.

Answer 8

2.

To determine

To Prepare: The investment revenue account, for Company N.

Answer 9

2.

To determine

To Prepare: The investment revenue account, for Company N.

Answer 10

3.

To determine

To Prepare: The investment account, of Company N in Company V.

Answer 11

3.

To determine

To Prepare: The investment account, of Company N in Company V.

Answer 12

4.

To determine

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

Answer 13

4.

To determine

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 12 - All investments in debt securities are classified...Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5Q Ch. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8Q Ch. 12 - Prob. 12.9Q Ch. 12 - Prob. 12.10Q

Solution Summary: The author describes the equity method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.

To Prepare: The investment revenue account, for Company N.

To Prepare: The investment account, of Company N in Company V.

To Explain: The effect of investment by Company N on December 31, 2018, in the statement of cash flows.

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Chapter 12 Solutions