2. On January 1, 2019, AB Company exchanges 10,000 shares of its common stock for all of the net assets of CD, Inc. Each of the NT's shares has a $5 par value and a $40 fair value. AB also paid $35,000 as direct out- of-pocket costs. Several of CD’s accounts have fair values that differ from their book values on this date: Book Values Fair Values $ 85,000 65,000 100,000 $ 83,000 125,000 180,000 160,000 45,000 Receivables Trademarks Furniture and Fixture Research and development Notes payable -0- 40,000 Precombination January 1, 2019, book values for the two companies are as follows: AB CD Cash $ 50,000 120,000 300,000 640,000 320,000 $ 1,430,000 9,000 85,000 65,000 100,000 105,000 $ 364,000 Receivables Trademarks Furniture and Fixture Equpiment (net) Totals Accounts Payable Notes Payable 100,000 270,000 34,000 60,000 50,000 30,000 190,000 $ 364,000 Common stock 400,000 30,000 Additional paid-in capital Retained earnings 630,000 $ 1,430,000 Totals Assume that this combination is a statutory merger so that CD’s accounts will be transferred to the records of AB. CD will be dissolved and will no longer exist as a legal entity. Using the acquisition method, prepare the journal entry to record the purchase and a postcombination balance sheet for AB as of the acquisition date.

On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the open market in exchange for $15,500. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $94,000. During the next two years, the following information is available for Zip Company: Common Stock Fair Value (12/31) $321,000 376,000 478,000 Dividends Income Declared 2019 $79,000 89,000 $6,200 15,800 2020 2021 At December 31, 2020, Zip reports a net book value of $280,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2020. a. Assume Akron applies the equity method to its Investment in Zip account: 1. What amount of equity income should Akron report for 2021? 2. On Akron's December 31, 2021, balance sheet, what amount is reported for the Investment in Zip account? b. Assume Akron uses…

Lexington Co. has the following securities outstanding on December 31, 2017 (its first year of operations).   Cost Fair Value Greenspan Corp. stock $20,000 $19,000 Summerset Company stock 9,500 8,800 Tinkers Company stock 20,000 20,600   $49,500 $48,400 During 2018, Summerset Company stock was sold for $9,200, the difference between the $9,200 and the “fair value” of $8,800 being recorded as a “Gain on Sale of Investments.” The market price of the stock on December 31, 2018, was Greenspan Corp. stock $19,900; Tinkers Company stock $20,500.Instructions(a) What justification is there for valuing equity securities at fair value and reporting the unrealized gain or loss as part of net income?(b) How should Lexington Co. report this information in its financial statements at December 31, 2017? Explain.(c) Did Lexington Co. properly account for the sale of the Summerset Company stock? Explain.(d) Are there any additional entries necessary for Lexington Co. at December 31,…

On January 15, 2020 bieber co purchased 30,000 shares of Hand Co. at $35 per share, paying $10,000 in commissions to the broker of the deal. On March 17, 2020, Hand Co. paid a cash dividend of $2.50 per share. The fair value of the Hand Co. stock at the end of 2020 was $38 per share. During 2020, Hand Co. had net income of $3,000,000. Prepare the journal entries for Bieber Co. for the above transaction assuming the amount of shares purchased represents 40% of Hand Co. outstanding stock.

On April 15, 2023, Rizzo Inc. purchased 34,500 shares of Hernandez, Inc. for $22 per share (passive interest). During the year Rizzo Inc. sold 4,500 shares of Hernandez, Inc. for $25 per share. Rizzo Inc. started operations on January 1, 2023. At December 31, 2023 the market price of Hernandez, Inc.’s stock was $19 per share. What is the total amount of unrealized gain (loss) that Rizzo Inc. will report through its income statement for the year ended December 31, 2023 related to its investment in Hernandez, Inc. stock?

On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the open market in exchange for $15,600. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $97,000.   During the next two years, the following information is available for Zip Company:     Income Dividends Declared Common StockFair Value (12/31) 2019     $312,000 2020 $85,000 $7,900 388,000 2021 94,000 16,000 487,000     At December 31, 2020, Zip reports a net book value of $298,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2020.   Assume Akron applies the equity method to its Investment in Zip account: What amount of equity income should Akron report for 2021? On Akron’s December 31, 2021, balance sheet, what amount is reported for the Investment in Zip account?

During 2019, Honeymooners Companies issued 4,000 preferred shares with par value of $ 1 to $ 11 each. Each preferred share can be exchanged (convert), at the option of the holder (investor), for three Honeymooners common shares with par value of $ 2. In April 2020, all preferred shares were exchanged. At the time of the exchange, how much must Honeymooners credit to the contributed capital account in excess of par value of commons? Select one: to. $ 44,000 b. $ 0 c. $ 40,000 d. $ 20,000

Godo

Dineshbhai

S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2021, S&L purchased Coca-Cola bonds at par for $884,000 and sold the bonds on January 3, 2022, for $ 890,000. At December 31, the bonds had a fair value of $881,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2021 and (b) the sale of the bonds in 2022, including recognition of any unrealized gains in 2022 prior to sale and reclassification of amounts out of OCI.