Fundamental Accounting Principles
23rd Edition
ISBN: 9781259536359
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 15, Problem 4APSA
Problem 15−4A
Accounting for long-term investments in securities; with and without signi?cant in?uence
P3 P4
Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events in its long-term investments
2017
Jan. 5 Selk purchased 60,000 shares (20% of total) of Kildaire’s common stock for $1,560,000.
Oct. 23 Kildaire declared and paid a cash dividend of $3.20 per share.
Dec. 31 Kildaire’s net income for 2017 is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share.
2018
1. Oct. 15 Kildaire declared and paid a cash dividend of $2.60 per share.
2. Dec. 31 Ki1daire’s net income for 2018 is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share.
2019
Jan. 2 Selk sold all of its investment in Kildaire for $1,894,000 cash
Part 1
Assume that Selk has a signi?cant in?uence over Kildaire with its 20% share of stock.
Required
1. Prepare
2. Compute the carrying (book) value per share of Selk’s investment in Kildaire common stock as re?ected in the investment account on January 1, 2019.
3. Compute the net increase or decrease in Selk’s equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire.
Check (2) Carrying value per share $29
Part 2
Assume that although Selk owns 20% of Kildaire’s outstanding stock, circumstances indicate that it does not have a signi?cant in?uence over the investee and that it is classi?ed as an available-for-sale security investment.
Required
1. Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment.
2. Compute the cost per share of Selk’s investment in Kildaire common stock as re?ected in the investment account on January 1, 2019.
3. Compute the net increase or decrease in Selk’s equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire.
(1) 1/2/2019 Dr. Unrealized Gain-Equity $360,000
(3) Net increase $682,000
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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.
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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.
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Chapter 15 Solutions
Fundamental Accounting Principles
Ch. 15 - Prob. 1DQCh. 15 - Prob. 2DQCh. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQ
Ch. 15 - Prob. 11DQCh. 15 - Prob. 12DQCh. 15 - Prob. 13DQCh. 15 - Prob. 14DQCh. 15 - Prob. 1QSCh. 15 - Prob. 2QSCh. 15 - Prob. 3QSCh. 15 - Prob. 4QSCh. 15 - Prob. 5QSCh. 15 - QS 15-6
Debt securities transactions
P2
On January...Ch. 15 - Prob. 7QSCh. 15 - Prob. 8QSCh. 15 - Prob. 9QSCh. 15 - Prob. 10QSCh. 15 - Prob. 11QSCh. 15 - Prob. 12QSCh. 15 - Prob. 13QSCh. 15 - Prob. 14QSCh. 15 - Prob. 15QSCh. 15 - Prob. 16QSCh. 15 - Exercise 15-1 Debt and equity securities and shod-...Ch. 15 - Prob. 2ECh. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Prob. 5ECh. 15 - Prob. 6ECh. 15 - Prob. 7ECh. 15 - Prob. 8ECh. 15 - Prob. 9ECh. 15 - Prob. 10ECh. 15 - Prob. 11ECh. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - Prob. 14ECh. 15 - Prob. 15ECh. 15 - Prob. 1APSACh. 15 - Prob. 2APSACh. 15 - Prob. 3APSACh. 15 - Problem 154A Accounting for long-term investments...Ch. 15 - Prob. 5APSACh. 15 - Prob. 1BPSBCh. 15 - Prob. 2BPSBCh. 15 - Prob. 3BPSBCh. 15 - Problem 154B Accounting for long-term investments...Ch. 15 - Problem 15-5B Long-term investment transactions;...Ch. 15 - Prob. 15SPCh. 15 - Prob. 1GLPCh. 15 - GL 15-2 General Ledger assignment 15–2 is adapted...Ch. 15 - Prob. 1BTNCh. 15 - Prob. 2BTNCh. 15 - Kasey Hartman is the controller for Wholemart...Ch. 15 - Prob. 4BTNCh. 15 - Prob. 5BTNCh. 15 - Prob. 6BTNCh. 15 - Prob. 7BTNCh. 15 - Prob. 8BTNCh. 15 - Prob. 9BTN
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