Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss. Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company. Requirement 1: To calculate: Journal entry to record the investment.

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Answer 1

Question

Chapter A2, Problem 23E

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 1:

To calculate:

Journal entry to record the investment.

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 2:

To calculate:

Journal entry to record the investment.

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Sawyer Industries, Inc. (SII), developed standard costs for direct material and direct labor. In 2011, SII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container. Budgeted quantity Budgeted price Direct materials 0.20 pounds Direct labor 0.10 hours $25 per pound $15 per hour During July, SII produced and sold 5,000 containers using 1,100 pounds of direct materials at an average cost per pound of $24 and 525 direct manufacturing labor hours at an average wage of $14.75 per hour. July's direct material efficiency variance is: A. $1,400 unfavorable B. $1,100 favorable C. $2,500 unfavorable D. None of these answers are correct

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Given correct answer general accounting

Answer 2

Question

Chapter A2, Problem 23E

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 1:

To calculate:

Journal entry to record the investment.

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 2:

To calculate:

Journal entry to record the investment.

Expert Solution & Answer

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Answer 3

Question

Chapter A2, Problem 23E

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 1:

To calculate:

Journal entry to record the investment.

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 2:

To calculate:

Journal entry to record the investment.

Expert Solution & Answer

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Answer 4

Question

Chapter A2, Problem 23E

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 1:

To calculate:

Journal entry to record the investment.

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 2:

To calculate:

Journal entry to record the investment.

Expert Solution & Answer

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Answer 5

Chapter A2, Problem 23E

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 1:

To calculate:

Journal entry to record the investment.

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 2:

To calculate:

Journal entry to record the investment.

Answer 6

Chapter A2, Problem 23E

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 1:

To calculate:

Journal entry to record the investment.

Answer 7

Chapter A2, Problem 23E

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 1:

To calculate:

Journal entry to record the investment.

Answer 8

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 2:

To calculate:

Journal entry to record the investment.

Answer 9

To determine

Concept introduction:

Fair Value Method: Fair market value method is applied when there is less than 20% share in company. In fair market value method we value the investment on its market value and difference is recorded in the income statement as a profit or loss.

Equity Method: In equity method we value the investment on the basis of their proportionate share in the assets of the investee company. Equity method applies when there is at least 20% share holding in the company. When there is 20% holding in any company then we have a significant control over the company.

Requirement 2:

To calculate:

Journal entry to record the investment.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. A2 - How do long-term investments differ from...Ch. A2 - Prob. 2DQ Ch. A2 - Prob. 3DQ Ch. A2 - Prob. 4DQ Ch. A2 - Prob. 5DQ Ch. A2 - Prob. 6DQ Ch. A2 - Prob. 7DQ Ch. A2 - How does the equity method discourage the...Ch. A2 - Prob. 9DQ Ch. A2 - Prob. 10DQ

Solution Summary: The author explains that fair value method is applied when there is less than 20% share in company.

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