ADV.FIN.ACCT.LL W/CONNECT+PROCTORIO PLUS
12th Edition
ISBN: 9781266380570
Author: Christensen
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.3.3E
To determine
Concept introduction Equity approach is most reliable and it is used generally in calculating the invested assets in the firm when the investor holds
To choose: The correct answer from the options.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
a. Define the equity method
b. Use the following example to describe the equity method
Presume that
Company A bought 30% of Company B’s outstanding common stocks at $400,000 (cash) on 01/01/2020
During 2020, Company B earned net income of $200,000 and paid dividends of $40,000
Provide the journal entries for this equity investment in fiscal year 2020
What is the balance for this equity investment on 12/31/2020?
Explain why the accounting numbers obtained using the equity method are misleading
Help me
Heritage Ltd. was organized on January 2, 2023. The following investment transactions and events occurred during the following
months:
2023
Jan.. 6 Heritage paid $589,500 (including transaction fees of $50) for 51,400 shares (20%) of Port Inc. outstanding common
shares.
Apr. 30 Port declared and paid a cash dividend of $1.50 per share.
Dec. 31 Port announced that its profit for 2023 was $620,000. Fair value of the shares was $13.20 per share.
2024
Oct. 15 Port declared and paid a cash dividend of $1.10 per share.
Dec.
31 Port announced that its profit for 2024 was $770,000. Fair value of the shares was $13.58 per share..
2025
Jan. 5 Heritage sold all of its investment in Port for $696,000 cash.
Assume that Heritage has a significant influence over Port with its 20% share.
Required:
1. Prepare the entries to record the preceding transactions in Heritage's books.
View transaction list
Journal entry worksheet
<
1
2
3
Ets dabika kinon
4
5
Record the purchase in strategic investment.
6
Chapter 2 Solutions
ADV.FIN.ACCT.LL W/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
Knowledge Booster
Similar questions
- please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)arrow_forwardView Policies Current Attempt in Progress For each of the following transactions, classify it as an operating, investing, financing, or significant noncash investing and financing activity or "none of the above" and assuming the company follows ASPE. (a) Repayment of mortgage payable (b) Payment of interest on mortgage (c) Purchase of land in exchange for common shares (d) Issue of preferred shares for cash (e) Payment for the purchase of a trading investment (f) Collection of accounts receivable (g) Declaration of cash dividend (h) Payment of cash dividend (i) Cash purchase of inventory (i) Recording of depreciation expense (k) Purchase and cancellation of common sharesarrow_forward10, please answer the question. thanksarrow_forward
- PROVIDE ANSWER IN ENGLISH ONLY USED ATTACHED IMAGE FOR INFORMATION a. Show how each of these investments are reported on the Munger.Com balance sheet. b. For assets that are marked to market, indicate where the unrealized value fluctuation is reported(in net income and/or in comprehensive income). For reference check a) total securities is , $4,220arrow_forwardMatching type. Match these 4 investments into its corresponding definition below 1. Investment in trading securities. 2. Investment in long-term securities. 3. Investment in associates accounted for using the equity method. 4. Investment in subsidiary Definitions: a. to take advantage of flunctuations of prices in the market b. to exert significant influence over another entity so as to obtain benefits from its operations c. To earn investment income such as interest and dividend and additional source of liquidity such as selling investments as the need arises. d. For trading purposes, for speculative purposes, and to manage risk exposures if used as a hedging instrument e. to exert control over another entity thus enabling the investor to be entitled to variable returns from its involvement with the investee f. to earn rental income and for capital appreciation.arrow_forwardMatch each of the items below with its most appropriately-related “letter” classification. (“Letter” classification may be used more than once, or not at all.) A. Fair Value Adjustment G. Available-for-sale debt securities B.Statement of Cash Flows H. Equity holdings between 20% and 5% C. Trading debt securitiesI. Temporary differences, deferred tax asset D. Equity holdings less than 20% J. Permanent differences E. Held-to-maturity debt securities K. Temporary differences, deferred tax liability F. Statute of Limitations L. Equity holdings more than 50% 1. Premiums paid on life insurance of officers (company is the beneficiary). ____ 2. Amortized cost; unrealized holding gains or losses not recognized; interest when earned .____ 3. Consolidation of financial statements; parent and subsidiary company income or loss combined. ____ 4. Estimated future warranty costs .____ 5. Represents the increase in taxes refundable (or saved) in future yearsas a…arrow_forward
- Please help with requirement two. Please and thank you. Thanksarrow_forwardMatch each of the items below with its most appropriately-related “letter” classification. (“Letter” classification may be used more than once, or not at all.)A. Fair Value Adjustment G. Available-for-sale debt securities B. Statement of Cash Flows H. Equity holdings between 20% and 50% C. Trading debt securitiesI. Temporary differences, deferred tax assetD. Equity holdings less than 20% J. Permanent differences E. Held-to-maturity debt securities K. Temporary differences, deferred tax liability F. Statute of Limitations L. Equity holdings more than 50% ____ 1. Premiums paid on life insurance of officers (company is the beneficiary).____ 2. Amortized cost; unrealized holding gains or losses not recognized; interest when earned.____ 3. Consolidation of financial statements; parent and subsidiary company income or loss combined.____ 4. Estimated future warranty costs.____ 5. Represents the increase in taxes refundable (or saved) in future yearsas a result of deductible temporary…arrow_forwarda. Compute the following ratios: i. Accounts Receivable Turnover ratio;ii. Accounts Payable Turnover ratio;iii. Average Collection Period;iv. Average Payable Period;v. Quick Ratio;vi. Gross Profit Margin.vii. Net Profit Marginviii. Debt ratiob b. Explain briefly what is factoring?arrow_forward
- With explain all points.arrow_forwardCompute Measures for DuPont Disaggregation Analysis Use the information below for 2018 for 3M Company to answer the requirements ($ millions) Sales Net income, consolidated Net income attributable to 3M shareholders Pretax interest expense Assets Total equity Equity attributable to 3M shareholders a. Compute return on equity (ROE) from the perspective of a 3M shareholder. Note: 1. Select the appropriate numerator and denominator used to compute ROE from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROE. Denominator Numerator Net income attributable to 3M shareholders ◆ Average total equity $ 5349 $ $ $ b. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage. (Perform these computations from a consolidated perspective). Profit Margin (PM) Note: 1. Select the appropriate numerator and denominator used to compute PM from the drop-down menu options. 2. Enter the numerator and denominator amounts to…arrow_forwardGive typed solutionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning