Connect Access Card for Financial Accounting
9th Edition
ISBN: 9781259738678
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter A, Problem 8MCQ
To determine
Find the correct option, the option which denotes the amounts to be reported by Company BO, on the
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At the beginning of the year, Corporation A purchased 8,000 shares of Corporation B's
common stock for $40 per share. B reported net income of $120,000 for the year and paid
dividends of $45,000. As of December 31, the market value of B's common stock was $42 per
share. Assuming the shares owned by Company A represent 10% of the total outstanding
stock of Company B, how much income should A report from its investment in B for the year if
the shares are considered trading securities? $4,500 $12,000 $20,500
Cosmos Corporation had the following long-term investment transactions.
Year 1
January 2
Purchased 5,000 shares of Visual, Inc. for $42 per share.
October 15
Received Visual, Inc. cash dividend of $2 per share.
December 31
Visual reported a net loss of $66,000 for the year.
Year 2
February 2
Sold 5% of the shares of Visual Inc for $7000.
Prepare the journal entries Cosmos Corporation should record for these transactions and events.
Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term
investments.
Year 1
January 5 Selk purchased 60,000 shares (20% of total) of Kildaire's common stock for $1,560,000.
October 23 Kildaire declared and paid a cash dividend of $3.20 per share.
December 31 Kildaire's net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00
per share.
Year 2
October 15 Kildaire declared and paid a cash dividend of $2.60 per share.
December 31 Kildaire's net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00
per share.
Year 3
January 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash.
Chapter A Solutions
Connect Access Card for Financial Accounting
Ch. A - Prob. 1QCh. A - Explain the difference in accounting methods used...Ch. A - Explain how bonds held to maturity are reported on...Ch. A - Explain the application of the cost principle to...Ch. A - Under the fair value method, when and how does the...Ch. A - Under the equity method, why does the investor...Ch. A - Prob. 7QCh. A - Prob. 8QCh. A - Prob. 9QCh. A - Company X owns 40 percent of Company Y and...
Ch. A - Prob. 2MCQCh. A - Dividends received from stock that is reported as...Ch. A - Prob. 4MCQCh. A - Prob. 5MCQCh. A - When using the equity method of accounting, when...Ch. A - Prob. 7MCQCh. A - Prob. 8MCQCh. A - Which of the following is true regarding the...Ch. A - Prob. 10MCQCh. A - Matching Measurement and Reporting Methods Match...Ch. A - Prob. 2MECh. A - Prob. 3MECh. A - Prob. 4MECh. A - Prob. 5MECh. A - Prob. 6MECh. A - Prob. 7MECh. A - Prob. 8MECh. A - Prob. 9MECh. A - Prob. 10MECh. A - Prob. 11MECh. A - Prob. 1ECh. A - Prob. 2ECh. A - Recording Transactions in the Available-for-Sale...Ch. A - Prob. 4ECh. A - Prob. 5ECh. A - Reporting Gains and Losses in the Trading...Ch. A - Prob. 7ECh. A - Prob. 8ECh. A - Prob. 9ECh. A - Prob. 10ECh. A - Prob. 11ECh. A - Prob. 1PCh. A - Prob. 2PCh. A - Prob. 3PCh. A - Prob. 4PCh. A - Prob. 5PCh. A - Comparing Methods to Account for Various Levels of...Ch. A - Prob. 7PCh. A - Recording Investments for Significant Influence LO...Ch. A - Prob. 9PCh. A - Prob. 10PCh. A - Prob. 11PCh. A - Prob. 1APCh. A - Prob. 2APCh. A - Reporting Passive Investments During January 2017,...Ch. A - Prob. 4APCh. A - Prob. 5APCh. A - Prob. 6APCh. A - Prob. 1CONCh. A - Finding Financial Information Refer to the...Ch. A - Prob. 2CPCh. A - Prob. 3CPCh. A - Prob. 4CPCh. A - Prob. 5CPCh. A - Prob. 6CP
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- Selk Steel Co., which began operations in Year 1, had the following transactions and events in its longterm investments. Year 1 Jan. 5 Selk purchased 60,000 shares (20% of total) of Kildaire’s common stock for $1,560,000. Oct. 23 Kildaire declared and paid a cash dividend of $3.20 per share. Dec. 31 Kildaire’s net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share. Year 2 Oct. 15 Kildaire declared and paid a cash dividend of $2.60 per share. Dec. 31 Kildaire’s net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share. Year 3 Jan. 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash. Required Prepare journal entries to record these transactions and events for Selk. Assume that Selk has a significant influence over Kildaire with its 20% share of stock.arrow_forwardOn January 1, Aivah Company purchased 2,000 common shares (25%) of Maywood Corporation as a long-term investment for $235,000. Later in the year, Maywood paid $23,000 in total cash dividends on December 15 and reported net income of $74,000 for the year ended December 31. Determine the amount reported as an equity method investment on Aivah's December 31 balance sheet. Balancearrow_forwardXYZ, Inc. owns 2,500 of the 10,000 outstanding shares of the common stock of ABC Corporation. The stock was originally purchased on January 1, Year 1 for $5 per share. During the year, ABC earned $100,000 in revenue and paid out dividends in the amount of $40,000. At December 31, Year 1, the stock is valued at $6 per share. By what amount should the Investment in ABC Corporation account increase as a result of this year's transactions? $10,000 O $25,000 O $15,000 O $2,500arrow_forward
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