Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Concept explainers
Question
Chapter 2, Problem 2.25P
a.
To determine
Introduction:
The consolidated
To prepare: A
a.
Expert Solution
Explanation of Solution
| Particular | Dr. | Cr. |
| Equity method entry on paper’s co.’s books | ||
| Investment in scissor co. Dr. | ||
| Cash Cr. | ||
| Record initial investment in scissor co. | ||
| Investment in scissor co. Dr. | ||
| Income from scissor co. Cr. | ||
| Cash Dr. | ||
| Investment in S Cr. | ||
| Record paper co. share in scissor co. dividend | ||
| Total |
b.
To determine
Concept introduction
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.
To prepare: the consolidated worksheet for the final values
b.
Expert Solution
Answer to Problem 2.25P
The consolidated worksheet is prepared and discussed.
Explanation of Solution
| Book value calculation | |||||
| Total book value | = | Common stock | + | Retained earnings | |
| Book value | |||||
| Net income | |||||
| Dividend | |||||
| Ending book value |
| Income statement | P | S | Dr. | Cr. | consolidated |
| Sales | |||||
| Less Cogs | |||||
| Depreciation Exp | |||||
| Sel. Exp | |||||
| Income | |||||
| Net income |
| Statement of Retain Earning | P | S | Dr. | Cr. | Consolidated |
| Opening balance | |||||
| Net income | |||||
| Less dividend declared | |||||
| End balance |
| Income statement | Paper co | Scissor co | Eliminated DR | Eliminated CR | consolidated |
| Cash | |||||
| Accounts received | |||||
| Inventory | |||||
| Investment in scissor co | |||||
| Land | |||||
| Building and equipment | |||||
| Less accumulated depreciation | |||||
| Total assets | |||||
| Account payable | |||||
| Bonds | |||||
| Common stocks | |||||
| Retained earnings | |||||
| Total liabilities |
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Students have asked these similar questions
Subject- accounting
Instructions
At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock
as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment.
Tran Corp. has 850,000 shares of common stock outstanding, including the shares acquired by Herrera
Corporation.
Required:
A. Journalize the entries by Herrera Corporation on December 31 to record the following
information (refer to the Chart of Accounts for exact wording of account titles):
1. Tran Corp. reports net income of $974,000 for the current period.
2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current
period.
B. Why is the equity method appropriate for the Tran Corp. investment?
Owe
Subject: acounting
Chapter 2 Solutions
Advanced Financial Accounting
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2AQCh. 2 - When is equity method reporting considered...Ch. 2 - Prob. 2.4QCh. 2 - Prob. 2.5QCh. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - How does carrying securities at fair value...Ch. 2 - How does the fully adjusted equity method differ...
Ch. 2 - Prob. 2.11QCh. 2 - What is the modified equity method? When might a...Ch. 2 - Prob. 2.13AQCh. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16QCh. 2 - Prob. 2.17QCh. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.19QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.21QCh. 2 - Prob. 2.22QCh. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3ACCh. 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 - Prob. 2.1.5ECh. 2 - Prob. 2.1.6ECh. 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. 2.3.4ECh. 2 - Cost versus Equity Reporting Winston Corporation...Ch. 2 - Prob. 2.5ECh. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Prob. 2.9ECh. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.12AECh. 2 - Prob. 2.13AECh. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Prob. 2.19PCh. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Prob. 2.21APCh. 2 - Equity-Method Income Statement Wealthy...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.25PCh. 2 - Prob. 2.26PCh. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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