Horngren's Accounting: The Managerial Chapters, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134491509
Author: MILLER-NOBLES, Tracie L., Mattison, Brenda L., Matsumura, Ella Mae
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 15, Problem 2QC
Which of the following investments is most likely classified as a held-to-maturity debt investment?
Learning Objective 1
- 80% stock ownership in a subsidiary
- 100% ownership in voting stock of a supplier
- 10-year bonds
- None of the above
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
PROBLEM 4: FOR CLASSROOM DISCUSSION
Financial and Non-financial liabilities
1. Mid-Earth Co.'s liabilities as of December 31, 20x1 include the
following:
Accounts payable
Preference shares issued with mandatory redemption
Unearned income
Utilities payable
Warranty obligation
Deferred tax liability
PhilHealth contribution payable
Obligation to deliver a fixed number of own shares
worth a fixed amount of cash
Share dividends payable
Rent payable
P15,000
100,000
7,000
16,000
7,000
2,000
5,000
12,000
3,000
9,000
Requirement: Compute for the total financial liabilities to be
disclosed in Mid-Earth Co.'s 20x1 notes to financial statements.
Accounting for the Equity Investment When Price Exceeds Book Value
Assume an investor purchases all of the stock of the investee in a stock purchase for $1,800. The investee's balance sheet on the date of purchase is as follows:
Accounts receivable $150 Mortgage payable
$150
Inventories
300
Building
1200 Stockholders' equity
1500
Total assets
$1,650 Total liabilities and equity $1,650
In this example, the amount paid (i.e., $1,800) is $300 greater than the book value of the net assets of the investee (i.e., $1,500). Assume the additional $300 of purchase price relates to an unrecognized patent held by the investee that has a remaining useful life of 10 years on the acquisition date. We also assume, subsequent to the purcha
investee reports net income of $300 and pays $90 in dividends to the investor.
Required
a. Provide the journal entry to recognize the Equity Income by the investor.
b. Provide the journal entry to record the receipt of the dividend.
c. Provide the journal entry to…
An equity investment may be accounted for using the equity method if
the investor has significant influence over the investee. Significant
influence is indicated by ownership of
More than 50%
More than 70%
At least 10%
From 20 to 50%
Chapter 15 Solutions
Horngren's Accounting: The Managerial Chapters, Student Value Edition (12th Edition)
Ch. 15 - Prob. 1QCCh. 15 - Which of the following investments is most likely...Ch. 15 - Prob. 3QCCh. 15 - A company invested $45,000 in Yale Co. stock. The...Ch. 15 - Prob. 5QCCh. 15 - Prob. 6QCCh. 15 - Prob. 7QCCh. 15 - Prob. 8QCCh. 15 - Prob. 9QCCh. 15 - Prob. 10QC
Ch. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQCh. 15 - Prob. 11RQCh. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - Prob. 14RQCh. 15 - Prob. S15.1SECh. 15 - Prob. S15.2SECh. 15 - Prob. S15.3SECh. 15 - Prob. S15.4SECh. 15 - Prob. S15.5SECh. 15 - Prob. S15.6SECh. 15 - Prob. S15.7SECh. 15 - Accounting for debt investments Learning Objective...Ch. 15 - Prob. E15.9ECh. 15 - Prob. E15.10ECh. 15 - Prob. E15.11ECh. 15 - Accounting for equity investments Learning...Ch. 15 - Prob. E15.13ECh. 15 - Prob. E15.14ECh. 15 - Prob. E15.15ECh. 15 - Prob. E15.16ECh. 15 - Prob. E15.17ECh. 15 - Prob. P15.18APGACh. 15 - Prob. P15.19APGACh. 15 - Prob. P15.20APGACh. 15 - Accounting for debt investments Learning Objective...Ch. 15 - Prob. P15.22BPGBCh. 15 - Prob. P15.23BPGBCh. 15 - Prob. P15.24CTCh. 15 - Prob. 25CPCh. 15 - Prob. 15.1TIATCCh. 15 - Prob. 15.1DCCh. 15 - Prob. 15.1EICh. 15 - Prob. 15.1FCCh. 15 - Prob. 15.1FSC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Preferred stockholders 75 K A. are guaranteed to receive an annual dividend payment OB. are guaranteed that they will not have a loss on their investment OC. receive a dividend preference over common stockholders OD. receive a set percentage of corporation net income Marrow_forward20XX: Unearned rent Retained earnings (unrestricted) Common stock, $5 par Premium on bonds payable Bonds payable Additional paid-in capital on common stock Treasury stock, at cost Retained earnings restricted for plant expansion Sinking fund for bond retirement Required: Prepare the shareholders' equity section of the balance sheet for Meyers. $4,500 141,000 150,000 1,800 28,000 55,000 29,000 17,000 31,250arrow_forwardEquity method journal entries (price equals book value) Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method. a. An investor purchases 14,400 common shares of an investee at $16 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the investee. b. The investee reports net income of $172,800. c. The investor receives a cash dividend of $1.50 per common share from the investee. d. The investor sells all 14,400 common shares of the investee for $260,280. General Journal Ref. Description Debit Credit a. b. C. d. Equity investmentarrow_forward
- Self-Assessment Task 6.18 Score Items Bacoor Company had 2,500,000 ordinary shares outstanding on January 1, 2021. An additional 500,000 ordinary shares were issued on April 1, 2021 and 250,000 shares on July 1, 2021. On October 1, 2021, the entity issued 5,000 P1,000 face value, 7% convertible bonds. Each bond is convertible into 40 ordinary shares. No bonds were converted into ordinary shares in 2021. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively? 2,875,000 and 2,925,000 2,875,000 and 3,075,000 3,000,000 and 3,050,000 3,000,000 and 3,200,000arrow_forwardHi can you solve and explain what is Financial Liabilities for me to understand what should only the portion to include so. Thank you so mucharrow_forward34arrow_forward
- a. Define the equity method b. Use the following example to describe the equity method Presume that Company A bought 30% of Company B’s outstanding common stocks at $400,000 (cash) on 01/01/2020 During 2020, Company B earned net income of $200,000 and paid dividends of $40,000 Provide the journal entries for this equity investment in fiscal year 2020 What is the balance for this equity investment on 12/31/2020? Explain why the accounting numbers obtained using the equity method are misleadingarrow_forwardAssessing Financial Statement Effects of Equity Method SecuritiesUse the financial statement effects template to record the following transactions involving investments in marketable securities accounted for using the equity method.a. Purchased 12,000 common shares of Bakersfield Co. at $10 per share; the shares represent 30% ownership in Bakersfield.b. Received a cash dividend of $1.50 per common share from Bakersfield.c. Bakersfield reported annual net income of $75,000.d. Sold all 12,000 common shares of Bakersfield for $128,500.Use negative signs with answers, if appropriate. Balance Sheet Income Statement Noncash Contrib. Earned Transaction Cash Asset + Assets = Liabilities + Captial + Capital Revenues - Expenses = Net income a. Purchased shares of Bakersfield. Answer Answer Answer Answer Answer Answer Answer Answer b. Received cash dividend from Bakersfield. Answer Answer Answer Answer Answer Answer Answer Answer c.…arrow_forwardQuestion 41.arrow_forward
- return on equity (Learning Objective Assume that Skippito, Inc., has the following data: Net income for 2010.......... Preferred dividends for 2010.. Total stockholders' equity, 12/31/2010. Total stockholders' equity, 12/31/2009. Common stockholders' equity, 12/31/2010. Common stockholders' equity, 12/31/2009. Requirements 1. Calculate Skippito's return on equity for 2010. 2. Calculate Skippito's return on common equity for 2010. 3. Comment on Skippito's performance during 2010. $ 223,000 $ 23,000 $1,009,000 $1,384,000 $ 987,000 $1,207,000arrow_forwardWhich of the following capital structures is optimal? Debt Equity EPS Stock Price 40% 60% $2.95 $26.50 50% 50% $3.05 $28.90 60% 40% $3.18 $31.20 70% 30% $3.31 $30.00 80% 20% $3.42 $30.40 Question 1 options: 40% debt 50% debt 60% debt 70% debt 80% debtarrow_forwardinterpret image belowarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Financial instruments products; Author: fi-compass;https://www.youtube.com/watch?v=gvxozM3TUIg;License: Standard Youtube License