Don't give solution in image format.. As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 480,000shares for $560,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and bookvalue of AMC's net assets were equal. During the year, AMC earned net income of $330,000 and distributed cashdividends of 25 cents per share. At year-end, the fair value of the shares is $593,000 Record the cash dividend of 25cents per share. Record any necessary year - end adjusting journal entry when the fair value of the shares held are $593,000 at year-end.

Purchase of investment:Debit: Investment, 560,000Credit: Cash, 560,000 Share in net income= 330,000…

Answered: As a long-term investment, Painters'…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 510,000 shares for $590,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $360,000 and distributed cash dividends of 30 cents per share. At year-end, the fair value of the shares is $626,000. Record Painters' Equipment's share of AMC Supplies' $360,000 net income. Record the cash dividend of 30 cents per share. Record any necessary year-end adjusting journal entry when the fair value of the shares held are $626,000 at year-end.
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 470,000 shares for $550,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $320,000 and distributed cash dividends of 20 cents per share. At year-end, the fair value of the shares is $582,000. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. 1. Record the purchase of AMC Supplies shares for $550,000 as a long-term investment. 2. Record Painters' Equipment's share of AMC Supplies' $320,000 net income. 3. Record the cash dividend of 20 cents per share. 4. Record any necessary year-end adjusting journal entry when the fair value of the shares held are $582,000 at year-end.
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 470,000 shares for $550,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $320,000 and distributed cash dividends of 20 cents per share. At year-end, the fair value of the shares is $582,000. 1. Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. Record the purchase of AMC Supplies shares for $550,000 as a long-term investment. Record Painters' Equipment's share of AMC Supplies' $320,000 net income. Record the cash dividend of 20 cents per share. Record any necessary year-end adjusting journal entry when the fair value of the shares held are $582,000.
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On January 1, Year 8, Shuswap Inc. and Kalamalka Inc. formed a new joint venture, Okanagan Inc. Shuswap contributed equipment with a book value of $900,000 and a fair value of $2,100,000 for a 50% interest in the joint venture. On December 31, Year 8, Okanagan Inc. reported a net income of $612,000. The equipment transferred has an estimated useful life of 20 years. Ignore taxes. Assume the transaction does not have commercial substance because the equipment will be used for the same purpose by Okanagan. Calculate the gain on the contribution of equipment and prepare the journal entries for Shuswap Inc. to record the events on January 1 and December 31, Year 8, including Shuswap's share of profit.
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