Chapter A, Problem 7P

1.

To determine

Indicate the method used by Company C to account the investment in Corporation S under Case A and Case B.

2.

a.

To determine

Journalize the purchase of investment in Company C stock for Case A and Case B.

b.

To determine

Journalize the income reported by Corporation S, for Case A and Case B.

c.

To determine

Journalize the dividends paid by Corporation S, for Case A and Case B.

d.

To determine

Journalize the adjusting entry for the changes in fair value, for Case A and Case B.

3.

a.

To determine

Show the amounts related to investments, reported on the balance sheet of Company C.

b.

To determine

Show the amounts related to investments, reported on the statement of stockholders’ equity of Company C.

c.

To determine

Show the revenue related to investments, reported on the income statement of Company C.

4.

To determine

Explain the reasons for the differences between the Case A and Case B investments.