Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains. Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset. Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain. An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss. (a) To record: To record the purchase of investment. Given information: All the information related to F Corp. is available in the question document.

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Chapter 17, Problem 5BE

To determine

Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains.

Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset.

Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.

An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.

(a) To record: To record the purchase of investment.

Given information: All the information related to F Corp. is available in the question document.

To determine

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

To determine

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.

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KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Property, plant and equipment (cost) Accumulated depreciation Long-term investments Inventory Accounts receivable Company tax paid in advance Bank EQUITY AND LIABILITIES 2024 2023 R R 2 490 000 1 620 000 (630 000) 660 000 1 050 000 1 230 000 30 000 (480 000) 450 000 1 290 000 900 000 0 750 000 660 000 5 580 000 4 440 000 Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.

Accounting Question

REQUIRED Study the information given below and answer the following questions. Where discount factors are required use only the four decimals present value tables that appear after the formula sheet or in the module guide. Ignore taxes. 5.1 Calculate the Accounting Rate of Return on average investment of the second alternative (expressed to two decimal places). 5.2 Determine which of the two investment opportunities the company should choose by calculating the Net Present Value of each alternative. Your answer must include the calculation of the present values and NPV. 5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION The management of Bentall Incorporated is considering two investment opportunities: (5 marks) (9 marks) (6 marks) The first alternative involves the purchase of a new machine for R900 000 which…

Answer 2

Question

Chapter 17, Problem 5BE

To determine

Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains.

Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset.

Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.

An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.

(a) To record: To record the purchase of investment.

Given information: All the information related to F Corp. is available in the question document.

To determine

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

To determine

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.

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Answer 3

Question

Chapter 17, Problem 5BE

To determine

Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains.

Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset.

Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.

An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.

(a) To record: To record the purchase of investment.

Given information: All the information related to F Corp. is available in the question document.

To determine

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

To determine

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.

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Answer 4

Question

Chapter 17, Problem 5BE

To determine

Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains.

Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset.

Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.

An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.

(a) To record: To record the purchase of investment.

Given information: All the information related to F Corp. is available in the question document.

To determine

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

To determine

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.

Expert Solution & Answer

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Answer 5

Chapter 17, Problem 5BE

To determine

Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains.

Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset.

Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.

An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.

(a) To record: To record the purchase of investment.

Given information: All the information related to F Corp. is available in the question document.

To determine

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

To determine

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.

Answer 6

Chapter 17, Problem 5BE

To determine

Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains.

Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset.

Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.

An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.

(a) To record: To record the purchase of investment.

Given information: All the information related to F Corp. is available in the question document.

Answer 7

Chapter 17, Problem 5BE

To determine

Equity investment: An investment made in shares and is held to earn some income in the form of dividends and capital gains.

Fair value: Fair value is a selling price which is agreed by the buyer and seller. It is also the estimate of the potential market price of good, service or asset.

Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.

An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.

(a) To record: To record the purchase of investment.

Given information: All the information related to F Corp. is available in the question document.

Answer 8

To determine

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

Answer 9

To determine

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

Answer 10

To determine

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.

Answer 11

To determine

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.

Answer 12

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Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 17 - Prob. 1Q Ch. 17 - 2. What purpose does the variety in bond features...Ch. 17 - 3. What is the cost of a long-term investment in...Ch. 17 - 4. Identify and explain the three types of...Ch. 17 - 5. When should a debt security be classified as...Ch. 17 - 6. Explain how trading debt securities are...Ch. 17 - 7. At what amount should trading,...Ch. 17 - Prob. 10Q Ch. 17 - 11. (a) Assuming no Fair Value Adjustment account...Ch. 17 - Prob. 12Q

(b) To record: To record the dividend received. Given information: All the information related to F Corp. is available in the question document.

(c) To prepare: To prepare the fair value adjustment at the end of the year. Given information: All the information related to F Corp. is available in the question document.

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Chapter 17 Solutions

(b) To record: To record the dividend received.

Given information: All the information related to F Corp. is available in the question document.

(c) To prepare: To prepare the fair value adjustment at the end of the year.

Given information: All the information related to F Corp. is available in the question document.