Equity method : It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method. To Record: The transactions for equity on net income of investee recognized by investor.

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Answer 1

Question

Chapter AH, Problem H.4E

a)

To determine

Equity method: It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method.

To Record: The transactions for equity on net income of investee recognized by investor.

(b)

To determine

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

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Monroe Enterprises had beginning total liabilities of $65,000 and ending total liabilities of $85,000. The beginning balance in stockholders' equity was $75,000. During the year, total assets increased by $50,000. In addition, capital stock of $20,000 was issued, and dividends of $10,000 were declared and paid. How much was Monroe’s net income for the year?

Answer 2

Question

Chapter AH, Problem H.4E

a)

To determine

Equity method: It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method.

To Record: The transactions for equity on net income of investee recognized by investor.

(b)

To determine

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

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Answer 3

Question

Chapter AH, Problem H.4E

a)

To determine

Equity method: It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method.

To Record: The transactions for equity on net income of investee recognized by investor.

(b)

To determine

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

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Answer 4

Question

Chapter AH, Problem H.4E

a)

To determine

Equity method: It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method.

To Record: The transactions for equity on net income of investee recognized by investor.

(b)

To determine

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

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Answer 5

Chapter AH, Problem H.4E

a)

To determine

Equity method: It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method.

To Record: The transactions for equity on net income of investee recognized by investor.

(b)

To determine

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

Answer 6

Chapter AH, Problem H.4E

a)

To determine

Equity method: It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method.

To Record: The transactions for equity on net income of investee recognized by investor.

Answer 7

Chapter AH, Problem H.4E

a)

To determine

Equity method: It refers to an accounting technique used by an investor to determine the income earned on investments made in long-term equity securities of a company. Thus, the investor who owns a significant interest by having more than 20%, but less than 50% of ownership, accounts for investments in long-term equity securities under this method.

To Record: The transactions for equity on net income of investee recognized by investor.

Answer 8

(b)

To determine

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

Answer 9

(b)

To determine

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. AH - Prob. 1Q Ch. AH - Prob. 2Q Ch. AH - Prob. 3Q Ch. AH - Prob. 4Q Ch. AH - What is the cost of an investment in stock?Ch. AH - Prob. 6Q Ch. AH - Prob. 7Q Ch. AH - Prob. 8Q Ch. AH - Prob. 9Q Ch. AH - Distinguish between the cost and equity methods of...

Solution Summary: The author explains the equity method used by an investor to determine the income earned on investments in long-term equity securities of a company.

Concept explainers

To Compute: The balance amount of Stock Investments in Corporation S as at December 31.

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Chapter AH Solutions