On January 1, 2021, you purchased 25% of the outstanding common stock of Tiny Company for $6,700 in cash and plan to exercise significant influence over Tiny. On the acquisition date, Tiny's merchandise had a book value $800 higher than its market value (FIFO system) and their patent had a book value $1,000 lower than its market value (with a five year remaining life). On December 1, 2021, you received $75 of cash dividends from Tiny. On December 31, 2021, Tiny Company reported $2,000 of net income for the ENTIRE year and your shares of Tiny Company had a market value of $7,000. d.

On January 1, 2021, you purchased 25% of the outstanding common stock of Tiny Company for $6,700 in cash and plan to exercise significant influence over Tiny. On the acquisition date, Tiny's merchandise had a book value $800 higher than its market value (FIFO system) and their patent had a book value $1,000 lower than its market value (with a five year remaining life). On December 1, 2021, you received $75 of cash dividends from Tiny. On December 31, 2021, Tiny Company reported $2,000 of net income for the ENTIRE year and your shares of Tiny Company had a market value of $7,000. d.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2020, Pharoah Corporation purchased 40% of the common shares of Novak Company for $201,000. During the year, Novak earned net income of $77,000 and paid dividends of $19,250.Prepare the entries for Pharoah to record the purchase and any additional entries related to this investment in Novak Company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.)
On January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for $196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250. Prepare the entries for Vaughn to record the purchase and any additional entries related to this investment in Bramble Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)
At the beginning of 2022, Sana Co. purchased 4,500 of the 10,000 outstanding stock of Mina Co. This effectively gave Sana Co. significant influence over Mina Co. Sana purchased Mina's shares of stock at $240 per share. Transaction costs involved in the sale amounted to $50,000. How much is the value of the Investment in Associate at initial recognition?
On March 1, 2020 K.K. Corporation purchased 2,000 shares of Potter Wholesale for $35 per share. Based on the percentage of outstanding stock purchased, K.K. Corporation uses the fair value method to account for the investment. On December 31, 2020 the shares of Potter Wholesale had a current market value of $32 per share. What amount of realized gain or loss would K.K. Corporation report on its 2021 income statement if K.K. corporation sells the 2,000 shares of Potter Wholesale on July 1, 2021 for $34 per share? O $4,000 gain O $4,000 loss O $2,000 gain $2,000 loss O $1,000 loss
On January 1, 2020. Alison, Inc., paid $69,500 for a 40 percent interest in Holister Corporation's common stock. This investee had assets with a book value of $219,500 and liabilities of $95,500. A patent held by Holister having a $12,000 book value was actually worth $31,500. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2020, Holister earned income of $32,500 and declared and paid dividends of $11,000. In 2021, it had income of $71,500 and dividends of $16,000. During 2021, the fair value of Allison's investment in Holister had risen from $79,200 to $89,900. a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2021? b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2021? a. Investment in Holister b. Investment income
On January 1, 2020, Hand acquires 40% ownership of Foot. At the acquisition date, Foot had equipment with a book value of $100,000 and a fair value of $160,000. The remaining useful life is 4 years. What is the amount of amortization (debit to equity earnings) that will be recognized in 2020?
On January 1, 2020 Big acquires 90% of Small for a cash payment of $600,000. At acquisition date, the book value of all of Small’s assets and liabilities equaled their fair value with the exception of Building (10 year remaining life) that had a book value of $400,000 and a fair value of $900,000. For full year 2020, Small has net income of $300,000. How much is the noncontrolling interest share of Small’s net income for 2020 ?
On October 1, 2020, XYZ, Inc. exchanged 2,000 shares of its P500 value ordinary shares held in treasury for a patent owned by Mars Company. The treasury shares were acquired in 2019 at a cost of P800,000. At the time of the exchange, XYZ's ordinary share was quoted at P550 per share and the patent had a net carrying value on Mars' books of P900,000. At what amount should Jupiter record the patent?
During 2020, Cullumber Company purchased 69000 shares of Marigold Corporation common stock for $1150000 as an equity investment. The fair value of these shares was $1101000 at December 31, 2020. Cullumber sold all of the Marigold stock for $18 per share on December 3, 2021, incurring $45000 in brokerage commissions. Cullumber Company should report a realized gain on the sale of stock in 2021 of $96000. $47000. $141000. $92000.
On January 1, 2025, Ayayai Corporation purchased 40% of the common shares of Pina Company for $178,000. During the year, Pina earned net income of $86,000 and paid dividends of $21,500. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.) Debit Credit ION
During 2020, Tanso purchased 20,000 shares of Ginto common stock for P315,000 as an equity investment at FVTPL. The fair value of these shares was P300,000 on December 31, 2020. Tanso sold all of the Ginto stock for P17 per share on February 3, 2021, incurring P14,000 in brokerage commissions. Tanso should report a net realized gain/loss on the sale of stocks in 2021 amounting to
On January 1, 2020, Alison, Inc., paid $77,000 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $223,000 and liabilities of $94,500. A patent held by Holister having a $10,800 book value was actually worth $52,800. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2020, Holister earned income of $48,700 and declared and paid dividends of $16,000. In 2021, it had income of $74,500 and dividends of $21,000. During 2021, the fair value of Allison’s investment in Holister had risen from $90,580 to $100,180. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2021? Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2021?