Concept explainers
Equity-Method income Statement
Wealthy Manufacturing Company purchased 40 percent of the voting shares of Diversified Products Corporation on March 23, 20X4. On December 31, 20X8,Wealthy Manufacturing’s controller attempted to prepare income statements and
Wealthy manufacturing uses the equity method in accounting for its investment in Diversified
Products. The controller was also aware of the following specific transactions for Diversified Products in 20X8, which were not included in the preceding data:
1. Diversified sold its entire Health Technologies division on September 30, 20X8, for $375.000.The book value of Health Technologies division’s net assets on that date was $331,000. Thedivision incurred an operating loss of $15,000 in the first nine months of 20X8.
2. During 20X8,Diversified sold one of its delivery trucks after it was involved in an accidentand recorded a gain of $10,000.
Required
a. Prepare an income statement and retained earnings statement for Diversified Products for 20X8.
b. Prepare an income statement and retained earnings statement for Wealthy Manufacturing for 20X8.
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Chapter 2 Solutions
ADVANCED FINANCIAL ACCOUNTING-ACCESS
- Kevin Rogers and Kelly Simmons started Book Haven as a corporation, each contributing $55,000 in cash to start the business and receiving 5,000 shares of stock. At the end of the first year of operations on December 31, 2023, the following financial details were recorded: cash on hand and in the bank was $50,300, amounts due from customers for book sales totaled $32,400, and equipment was valued at $54,000. The company owed $10,000 to publishers for books purchased, and there was a one-year note payable to the bank for $6,100. No dividends were declared or paid during the year. Using the retained earnings equation with an opening balance of $0, calculate the net income for the year ending December 31, 2023.arrow_forwardi want to correct answer please help mearrow_forwardDo fast answer of this accounting questionsarrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
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