Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Question
Chapter 2, Problem 2.3.2E
To determine
Concept Introduction:
The equity method is the one in which the investor cannot control the investee as the investor is holding more than
The correct option for ascertaining the effect of method on investment account, retained earnings and net earnings.
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Students have asked these similar questions
Case 2: the Investment Held for Trading Securities account in the book of Tatay (acquired in 2020) represents 30% ownership interest in Walanay, Inc. Walanay subsequently reacquires 50% of its outstanding shares from other investors. The previously held equity of Tatay have a fair value of three times its book value now. Tatay elected to measure NCI at ‘proportionate share’.With the stated facts, answer the following:1.How much is the Consideration Transferred?a. P 1,350,000.00b. P 1,900,000.00c. P 1,750,000.00d. P 1,800,000.002.How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 150,000.00c. P 684,000.00d. P 1,200,000.003.How much is the Fair Value of the previously held equity interest in the acquiree?a. P 0.00b. P 540,000.00c. P 450,000.00d. P 500,000.00
How much is the unrealized gain (loss) accumulated in equity as of December 31,
20x2?
Karen Co. purchased the following equity securities on January 1, 20x1 for a total amount of
P360,000.
Cost
Alaska Co. preference shares
P200,000
160,000
Valdez Co. ordinary shares
Totals
P360,000
The shares did not qualify for recognition as held for trading, thus they were classified as
investment in equity securities measured at fair value through other comprehensive income.
On December 31, 20x1, the portfolio of Karen Co. comprised the following.
Fair value - 12/31/x1
Alaska Co. preference shares
P240,000
60,000
Valdez Co. ordinary shares
Total
P300,000
On December 31, 20x2, the portfolio of Karen Co. comprised the following:
Fair value - 12/31/x2
Alaska Co. preference shares
P220,000
180,000
Valdez Co. ordinary shares
Total
P400,000
On February 2, 20x3, all of the Alaska Co. preference shares were sold for P160,000 net of transaction
costs.
0
100,000
40,000
O (40,000)
6.
ABC Corp holds 1,000 shares of XYZ Corp.'s shares since 2019. The following are data available at Dec 1, 2020:
Cost per share P3.00
Transaction cost per share (upon acquisition) P1
Most recent transaction price per share P2
Transaction cost per share (current) P.50
If ABC classified these shares as investment in stocks-FVOCI, how much is the adjustment for the change in fair value?
FVPL 2,000
FVOCI 1,000
FVOCI 1,500
FVOCI 2,000
Chapter 2 Solutions
Advanced Financial Accounting
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2QCh. 2 - Describe an investor’s treatment of an investment...Ch. 2 - How is the receipt of a dividend recorded under...Ch. 2 - How does carrying securities at fair value...Ch. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.12QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16AQCh. 2 - When is equity method reporting considered...Ch. 2 - How does the fully adjusted equity method differ...Ch. 2 - What is the modified equity method? When might a...Ch. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.4ECh. 2 - Acquisition Price Phillips Company bought 40...Ch. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Carrying an investment at Fair Value versus Equity...Ch. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.16AECh. 2 - Prob. 2.17AECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Investments Carried at Fair Value and Equity...Ch. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.23PCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25APCh. 2 - Equity-Method income Statement Wealthy...Ch. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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