Concept explainers
(a)
Concept Introduction: The ethical dilemmas that the accountants may face sometimes include difference of opinions, confidentiality in payroll, illegal activities and pressure from the management to improve earnings and clients who may request to manipulate financial statements.
To Identify: The accounting issues that surround the record of income in future if Jacobson buys 15% of Biltrite’s outstanding shares.
(a)
Answer to Problem 1UTI
Jacobson can take this opportunity.
Explanation of Solution
Jacobson has a passive type of ownership. In forthcoming periods, Jacobson will record dividend income for only 15% of Biltrite’s declared dividends only. It will also require Jacobson to adjust the investment as per the market value at the end of each period.
(b)
Concept Introduction: The ethical dilemmas that accountants may face sometimes include difference of opinion, confidentiality in payroll, illegal activities and pressure from the management to improve earnings and clients who may request to manipulate the financial statements.
To Identify: The accounting issues that surround the record of income in future period if Jacobson buys 40% of Biltrite’s outstanding shares.
(b)
Answer to Problem 1UTI
Jacobson can take this opportunity.
Explanation of Solution
Jacobson will have the influential part of ownership. In the future period, 40% of Biltrite’s net income will be taken as the investment income. On the other hand, the dividends declared by Biltrite Company will impact the investment account but not the investment income account.
(c)
Concept Introduction: The ethical dilemmas that the accountants may face sometimes include difference of opinions, confidentiality in payroll, illegal activities and pressure from the management to improve the earnings and the clients who may sometimes request to manipulate the financial statements.
To Identify: The accounting issues that surround the record of income in future period if Jacobson buys 100% of Biltrite’s outstanding shares.
(c)
Answer to Problem 1UTI
The dividends declared by the Biltrite will not impact the income of Jacobson.
Explanation of Solution
Jacobson will have the ownership. In the future period, 100% of the Biltrite’s net income will be taken as the investment income. Biltrite Company’s nominal balances of accounts may be added to the nominal account of Jacobson.
(d)
Concept Introduction: The ethical dilemmas that the accountants may face sometimes include difference of opinions, confidentiality in payroll, illegal activities and pressure from the management to improve the earnings and the clients who may sometimes request to manipulate the financial statements.
To Identify: The accounting issues that surrounds the record of income in future period if Jacobson buys 80% of Biltrite’s outstanding shares.
(d)
Answer to Problem 1UTI
The dividends declared by the Biltrite will not impact the income of Jacobson.
Explanation of Solution
Jacobson will have the ownership. In future, 100% of Biltrite’s net income will be taken as investment income. The Biltrite’s nominal balance of accounts may be added to the nominal account of Jacobson. There will be consolidated net income followed by the distribution of non-controlling interest equal to 20% of Biltrite’s income. This is because Biltrite’s nominal balance accounts were added to the Jacobson nominal account.
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Chapter 2 Solutions
ADVANCED ACCOUNTING
- Monty Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income stetement for Monty as at May 31, 2020, are as The rollowing is additional Informacon soous transectons cunne tie year shoes may sa, coat for Monty ancy which tohows arks. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement is casn, Monty Issued ,000 edditone common snares. Cash dividends of $35,000 were declared and paid at the end of the fiscal year create cashflow direct method statementarrow_forwardBonita Industries reports the following ledger account balances at June 30, 2025: Cash $1158 Accounts receivable 2838 Inventory 3384 Prepaid rent 104 Equipment 320 Accumulated depreciation-equipment 66 Accounts payable 920 Unearned rent revenue 144 Common stock 220 Retained earnings 6740 Service revenue 392 Interest revenue 80 Salaries and wages expense 200 Insurance expense 98 Assuming that all of the accounts have normal balances, what are total credits on the company's trial balance at June 30, 2025? A. $8562. B. $8586. C. $8496. D. $8482.arrow_forwardA trial balance will balance even if A. a journal entry to record the purchase of equipment for cash of $52100 is not posted. B. a $13100 cash dividend is debited to dividends for $13100 and credited to cash for $1310. C. a $510 collection on accounts receivable is credited to accounts receivable for $510 without a corresponding debit. D. a purchase of supplies for $595 on account is debited to supplies for $595 and credited to accounts payable for $559.arrow_forward
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