rgin Inc. owns 30% of the outstanding voting common stock of Burkes Co. and has the ability to significantly influence the estee's operations and decision-making. On January 1, 2021, the balance in the Investment in Burkes Co. account was D2,000. Amortization associated with the purchase of this investment is $8,000 per year. During 2021, Burkes earned income of 08,000 and paid cash dividends of $36,000. Previously in 2020, Burkes had sold inventory costing $28,800 to Borgin for 8,000. All but 25% of this merchandise was consumed by Borgin during 2020. The remainder was used during the first few eeks of 2021. Additional sales were made to Borgin in 2021; inventory costing $33,600 was transferred at a price of $60,000. Of s total, 40% was not consumed until 2022. hat amount of equity income would Borgin have recognized in 2021 from its ownership interest in Burkes? Multiple Choice $19,792. $27,640. $22,672. < Prev 9 of 10 Next >

rgin Inc. owns 30% of the outstanding voting common stock of Burkes Co. and has the ability to significantly influence the estee's operations and decision-making. On January 1, 2021, the balance in the Investment in Burkes Co. account was D2,000. Amortization associated with the purchase of this investment is $8,000 per year. During 2021, Burkes earned income of 08,000 and paid cash dividends of $36,000. Previously in 2020, Burkes had sold inventory costing $28,800 to Borgin for 8,000. All but 25% of this merchandise was consumed by Borgin during 2020. The remainder was used during the first few eeks of 2021. Additional sales were made to Borgin in 2021; inventory costing $33,600 was transferred at a price of $60,000. Of s total, 40% was not consumed until 2022. hat amount of equity income would Borgin have recognized in 2021 from its ownership interest in Burkes? Multiple Choice $19,792. $27,640. $22,672. < Prev 9 of 10 Next >

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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On January 1, 2020, Windsor Company purchased 6,100 shares of Kusher Company stock for $439,200. Windsor's investment represents 30 percent of the total outstanding shares of Kusher. During 2020, Kusher paid total dividends of $152,000 and reported net income of $456,000. What revenue does Windsor report related to this investment and what is the amount to be reported as an investment in Kusher stock at December 31? Revenue $ Investment in Kusher stock at December 31 $
Surrell Inc. owns 30% of the outstanding voting common stock of Vicker Co. and has the ability to significantly influence the investee's operations and decision making. On January 1, 2019, the balance in the Investment in Vicker Co. account was $402,000. Amortization associated with this acquisition is $10,800 per year. During 2019, Vicker earned an income of $108,000 and paid cash dividends of $36,000. Previously in 2018, Vicker had sold inventory costing $28,800 to Surrell for $48,000. All but 25% of this merchandise was consumed by Surrell during 2018. The remainder was used during the first few weeks of 2019. Additional sales were made to Surrell in 2019; inventory costing $33,600 was transferred at a price of $60,000. Of this total, 40% was not consumed until 2020. What amount of equity income would Surrell have recognized in 2019 from its ownership interest in Vicker? $9,936. $24,840. $19,872. $21,114. $18,948.
On July 1, 2021, JKJ Corporation purchased 100 common shares of JMK Ltd. at $20 per share. JKJ expected to be able to sell this investment within a year at $28 per share. Dividends of $1 per share were declared and paid on August 1, 2021. On December 31, 2021, the fair value of each share was $23. What balance was shown in the investment account on JKJ's balance sheet on December 31 (year end)? $2,300 $2,400 $2,000 $2,800
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $365,000. Amortization associated with this acquisition is $12,600 per year. In 2021, Lindman earns an income of $132,000 and declares cash dividends of $33,000. Previously, in 2020, Lindman had sold inventory costing $33,600 to Matthew for $56,000. Matthew consumed all but 20 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $44,800 to Matthew for $80,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2021?
On May 1, 2020, Clarke Inc. acquired 1,250 shares of Mayson Ltd. for $75,000. This investment represents a 16% interest in Mayson Ltd. and Clark Inc. has significant influence. On December 31, 2020, Mayon Ltd. paid a $35,000 dividend to its shareholders. At April 30, 2021 Mayson Ltd.'s shares were valued at $30 per share and Mayson Ltd. reported net income of $27,000 for the year. On June 15, 2021, Clarke Inc. sold the shares for $37,000. Both Clarke Inc. and Mayson Ltd. have April 30, 2021 year-ends. Prepare dated journal entries for the investment on the acquiring company's books and from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
On January 2, 2021, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $90 million. Jackson Industry’s net income for the year ended December 31, 2021, was $120 million. The fair value of the shares held by Sanborn was $98 million at December 31, 2021. During 2021, Jackson declared a dividend of $60 million.Required:1. Prepare all appropriate journal entries related to the investment during 2021.2. Assume that Sanborn sold the stock on January 2, 2022 for $110 million. Prepare the journal entry Sanborn would use to record the sale.
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $382,000. Amortization of excess fair value associated with the 30% ownership is $10,500 per year. In 2021, Lindman earns an income of $156,000 and declares cash dividends of $39,000. Previously, in 2020, Lindman had sold inventory costing $54, 600 to Matthew for $78,000. Matthew consumed all but 20 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $59, 400 to Matthew for $90,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2021?
On January 2, 2019, SurfCity Co. purchased 15,000 shares of Topsail, Inc. for $20 per share. The investment represented 15% of Topsail's outstanding shares. On December 31, 2019, each share of Topsail was selling for $18 per share and on December 31, 2020, each share of Topsail was selling for $25 per share. Topsail declared and paid dividends totaling $25,000 in both 2019 and 2020. What was the total amount reported on the income statement in 2020 by SurfCity for its investment in Topsail? Group of answer choices $125,000 $78,750 $108,750 $100,000
Jackson Inc. purchased 30,000 shares of common stock of the Pixel Corporation for $10 per share on January 2, 2020. During 2020, Pixel had 100,000 shares of common stock outstanding, reported net income of $200,000, and paid cash dividends of $100,000. The fair value of Pixel stock on December 31, 2020 is $12 per share. On December 31, 2020, what will Jackson report on its Balance Sheet for its investment in Pixel? How much revenue should Jackson report for 2020 on its investment in Pixel? Round your answers to the nearest whole number. Dot not use dollar signs($) or commas(,). Blank # 1 Blank # 2
On January 1, 2021, Kendall Inc. purchased 25,000 shares of Kylie Company at a cost per share of P100. Kylie Company's outstanding ordinary shares are 100,000. Kendall is part of Kylie's board of directors. During the year, Kylie Company paid cash dividends of P700,000 and had a net income of P2,500,000. How much is the Investment in associate on December 31, 2021?
On January 1, 2020, Lovely Company paid P1,200,000 for 40,000 ordinary shares of Lonely Corporation which represent 25% investment in the net assets of Lonely. Lovely has the ability to exercise significant influence over Lonely. Lovely received a dividend of P3 per share from Lonely in 2020. The reported profit of Lonely for the year ended December 31, 2020 was P640,000. The balance of Lovely’s investment in Lonely at December 31, 2020 should be a. 1,480,000 b. 1,360,000 c. 1,240,000 d. 1,200,000
On January 4, 2021, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery’s operations. Runyan received dividends of $2.00 per share on December 15, 2021, and Lavery reported net income of $160 million for the year ended December 31, 2021. The market value of Lavery’s common stock at December 31, 2021, was $31 per share. On the purchase date, the book value of Lavery’s identifiable net assets was $800 million and:a. The fair value of Lavery’s depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million.b. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.Required:1. Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for…