Advanced Accounting (Looseleaf)
12th Edition
ISBN: 9780077632595
Author: Hoyle
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 7Q
Benns adopts the equity method for its 100 percent investment in Waters. At the end of six years, Benns reports an investment in Waters of $920,000. What figures constitute this balance?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On July 1, Year 1, XYZ Corporation purchased as a long-term investment a $2 million face amountABC Co. 6% bond for $2,025,000 plus accrued interest to yield 5.75%. On December 31, Year 1,the bonds had a fair value of $1,850,000. What amount of income should XYZ report on its incomestatement for the year ended December 31, Year 1, related to this bond investment if it is classifiedas a held-to-maturity security?a. $120,000b. $116,438c. $121,500d. $115,000
Hello,
Can you assist with questions attached, thanks much.
Bramble Limited, a public company that follows IFRS and has a calendar year end, made the following purchases of investments in
2023. Bramble intends to sell these investments to earn short-term profits from appreciation in their prices and accounts for the
investments using the FV-NI model. This is the first year in which Bramble invested in equity securities:
1.
2.
On March 20, purchased 4,500 shares of Wu Inc. common shares at $27 per share plus commission of $480.
On August 15, purchased 3,200 shares of Xi Inc. common shares at $23 per share plus commission of $420.
On June 30, Bramble sold 2,700 shares of Wu Inc. at $29 less commission of $600.
The December 31, 2023 market value of the Wu shares was $30 and of the Xi shares was $22.
(f)
(c)
Your answer is correct.
Prepare the adjusting entry needed at December 31, 2023. (Credit account titles are automatically indented when the
amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account…
Chapter 3 Solutions
Advanced Accounting (Looseleaf)
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10Q
Ch. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - If no legal, regulatory, contractual, competitive,...Ch. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - 32. Following are selected accounts for...Ch. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 1DYSCh. 3 - FASB ASC AND IASB RESEARCH CASE A vice president...Ch. 3 - Prob. 4DYSCh. 3 - Prob. 5DYS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Assuming the investment is appropriately recognized as financial assets at amortized cost: Determine the initial valuation of the investment.arrow_forwardAssuming the investment is appropriately recognized as financial assets at amortized cost: How much is the interest receivable to be recognized on December 31, 2020?arrow_forwardFeherty, Incorporated accounts for its investments under IFRS No. 9 and purchased the following investments during December 2024: Eighty of Donald Company’s $1,000 bonds. The bonds pay semiannual interest, return principal in 10 years, and include no other cash flows or other features. Feherty plans to hold 20 of the bonds to collect contractual cash flows over the life of the investment and to hold 60, both to collect contractual cash flows but also to sell them if their price appreciates sufficiently. Subsequent to Feherty’s purchase of the bonds, but prior to December 31, the fair value of the bonds increased to $1,020 per bond, and Feherty sold 20 of the 60 bonds. Feherty also sold 10 of the 20 bonds it had planned to hold to collect contractual cash flows over the life of the investment. The fair value of the bonds remained at $1,020 as of December 31, 2024. $25,300 of Watson Company common stock. Feherty does not have the ability to significantly influence the operations of…arrow_forward
- On February 18, 2018, Union Corporation purchased 10,000 shares of IBM bonds as a long-term investment for$600,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2018, and December 31, 2019, the market value of the bonds was $580,000 and $610,000, respectively.Required:1. What is the appropriate reporting category for this investment? Why?2. Prepare the adjusting entry for December 31, 2018.3. Prepare the adjusting entry for December 31, 2019.arrow_forwardOn January 1 of the current year, Baker Corp. purchased $50,000 of Chocolate Inc. bonds. These bonds pay 5% interest annually on December 31 and mature in ten years on December 31. The investment is classified as a held-to-maturity investment because Baker has the intent and the ability to hold the bonds for 10 years. The effective rate on the bonds is 4.5%. Amortization Schedule Journal Entries and Balance Sheet Presentation c. Prepare the journal entry for the purchase of the investment on January 1. Date Account Name Dr. Cr. Jan. 1, Year 1 To record purchase of investment. d. Prepare the journal entries to record interest received on December 31 of Year 1 and December 31 of Year 2. Date Account Name Dr. Cr. Dec. 31, Year 1 To record interest received. Dec. 31, Year 2 To record interest received. e. Indicate the carrying value of the Chocolate bonds on…arrow_forwardOn July 1, Year 2, San Benon Company purchased 4,000 of the P1,000 face amount, 8% bonds of Oat Corp. for 3,692,000 to yield a 10% per annum. The bonds, which mature on July 1, Year 5, pay interest semiannually on January 1 and July 1. San Benon classifies the securities as at amortized cost. What is the investment carrying value at December 31, Year 2?arrow_forward
- On 1/1/23, Jeckle Technologies Inc. paid $4, 792, 085 to acquire $5,000,000 in bonds that mature in 5 years. The bonds pay interest semi - annually at 6% per annum on 6/30 and 12/31. The fair value of the bonds at 12/31/23 was $4, 930, 392. Required: • Prepare the 2023 journal entries if the investment is classified as (i) HTM or (ii) AFS. • Assume Jeckle sold the bond investment on 7/1/24 for $4,890,000. Prepare the required journal entries assuming the bond is classified as (i) HTM or (ii) AFS.arrow_forwardTanner-UNF Corporation acquired as a long-term investment $240 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $210 million. Required:1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, balance sheet.4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $180 million. Prepare the journal…arrow_forwardOn January 1, 2022, BTS Company purchased as debt investments at amortized cost, P1,000,000 of JK Company’s 8% for 906,000. The bonds were purchased to yield 10% interest. The bonds mature on January 1, 2032 and pay interest semi-annually on January 1 and July 1. BTS uses the effective interest method of amortization. In its December 31, 2022 statement of comprehensive income, what amount should BTS report as interest revenue?arrow_forward
- Tanner-UNF Corporation acquired as a long-term investment $225 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $180 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $190 million. Required:1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, balance sheet.4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $170 million. Prepare the journal…arrow_forwardTanner-UNF Corporation acquired as a long-term investment $250 million of 8% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $210 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $220 million.Required:1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, balance sheet.4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $200 million. Prepare the journal entries…arrow_forwardOn January 1, 2021, Illuminati Company purchased 10% bonds with a face amount of P3,000,000. The bonds mature on January 1, 2031, and were purchased for P3,405,000 to yield 8%. The entity used the effective interest method of amortization and interest is payable annually every December 31. The business model for this investment is to collect contractual cash flows composed of interest and principal. On December 31, 2022, the entity changed the business model for this investment to realize fair value changes. On January 1, 2023, the fair value of the bonds was P2,845,000 at an effective rate of 11%. How much is the gain or loss on reclassification? 502,592 gain O 502,592 loss 532,400 gain O 532,400 lossarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY