ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
12th Edition
ISBN: 9781266379017
Author: Christensen
Publisher: INTER MCG
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Question
Chapter 2, Problem 2.1.4E
To determine
Concept Introduction:
The carrying amount: It is the recorded cost of asset. The carrying amount of an asset may not be same as current market value of the asset. Under Equity method, the carrying amountis updated by the share of investee income or losses and decrease the carrying value by any dividends received on the shares.
To choose: The correct option.
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Case 2-1. Audit of investment in equity investments at foir volue through profit or loss; Substantive audit
procedures.
You were able to obtain the following iedger details of Equity investment-FVTPL in connection with your audit of
the Strong Corporation for the year ended December 31, 2020:
Credit
Date
Jan. 10
Particulars
Purchase of Alpha Co. - 6,000 shares
Debit
P1,440,000
Feb. 20
Purchase of Beta Co. - 7,200 shares
Sale of Beta Co. - 2,400 shares
1,800,000
Mar. 1
540,000
Receipt of Alpha share dividend- Offsetting Credit to
retained earnings
Sale of Alpha - 4,800 shares
Sale of Alpha - 1,200 shares
May 31
132,000
Aug. 15
Sept. 1
1,176,000
276,000
The following information was obtained during your examination:
• Fram independent sources, you determine the follawing dividend information for Alpha Co. in 2020:
Declared
01/02
0s/02
08/01
Record
01/15
05/15
Nature
Cash
Payment
01/31
Rate
P20/share
Share
05/31
10%
Cash
08/30
09/15
P30/share
• Closing market quotation as at December 31,…
1. The cost method of accounting for stock investments is used when the company acquires
a. Greater than 50% of the company's stock
b. Between 20% to 50% of the company's stock
c. Less than 20% of the company's stock
2. The significance of percentage of ownership relates to how much _____________ the acquiring company has in the new company.
a. data
b. control
c. confidence
Show the solution in good accounting form
Chapter 2 Solutions
ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2QCh. 2 - Describe an investor’s treatment of an investment...Ch. 2 - How is the receipt of a dividend recorded under...Ch. 2 - How does carrying securities at fair value...Ch. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.12QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16AQCh. 2 - When is equity method reporting considered...Ch. 2 - How does the fully adjusted equity method differ...Ch. 2 - What is the modified equity method? When might a...Ch. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.4ECh. 2 - Acquisition Price Phillips Company bought 40...Ch. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Carrying an investment at Fair Value versus Equity...Ch. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.16AECh. 2 - Prob. 2.17AECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Investments Carried at Fair Value and Equity...Ch. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.23PCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25APCh. 2 - Equity-Method income Statement Wealthy...Ch. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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