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- Gant Company purchased 30 percent of the outstanding shares of Temp Company for $76,000 on January 1, 20X6. The following results are reported for Temp Company: Net income Dividends paid Fair value of shares held by Gant: January 1 December 31 a. Carries the investment at fair value. b. Uses the equity method. Required A Required B 20X6 $ 47,000 14,000 Required: Gant Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp: Complete this question by entering your answers in the tabs below. Income from investment Balance in investment 76,000 95,000 20X6 20X7 $ 42,000 30,000 95,000 92,000 20X7Oolong’s Corporation has an investment in 10,000 shares of Chiatze Company ordinary share with a cost of P436,000. These shares are used in a property dividend to shareholders of Oolong’s. The property dividend is declared on May 25 and scheduled to be distributed on July 31 to shareholders of record on June 15. The fair value per share of Chiatze share is P63 on May 25, P66 on June 15, and P68 on July 31. The net effect of this property dividend on retained earnings is a reduction of a.P680,000 b.P630,000 c.P660,000 d.P436,000Garrett Manufacturing owns 10% of the common stock of Timberline Corporation and used the fair-value method to account for this investment. Timberline reported a net income of $110,000 for 20X2 and paid dividends of $50,000 on October 1, 20X2.How much income should Garrett recognize on this investment in 20X2? Group of answer choices $50,000 $16,500 $25,500 $7,500 $5,000
- Kirk Hammet Co. holds 20,000, P10 par value, shares of 4Horsemen, INc. as investment in unquoted equity securities measured at cost. On April 1, 20x1, Kirk received 5% share dividends from 4Horsement. The carrying amount of the investment on this date is P2,310,000 equal to the original acquisition cost. Kirk sold the share dividends for P224 on April 30, 20x1. Requirements: Provide the journal entries.Delaney Company sells, for $280,000, a 40% of the shares it owns in Hunter Company. The carrying value of the Equity Investment relating to these shares is $240,000 on the date of sale. The journal entry to record the sale assuming Delaney keeps control over Hunter includes: Select one: A. Equity investment, debit, $240,000 B. Gain, credit, $40,000 C. APIC, credit, $40,000 D. Equity investment, credit, $280,000On January 1, 20X1, P Company (PC) purchased 80% of the outstanding shares of S Company (SC) at thecost of P700,000. On that date, SC had P300,000 and P500,000 capital stock and retained earnings,respectively. The non-controlling interest (NCI) is measured on a fair-value basis.For 20X1, PC had a comprehensive income (CI) of P300,000 and paid dividends of P100,000. On the otherhand, SC reported a CI of P150,000 and paid dividends of P50,000. All of the assets and liabilities of SCompany had book values that approximately equal to their respective market values.On December 31, 20X1, PC sold a piece of equipment with a book value of P30,000 to SC for P25,000.The gain on the sale is included in the CI of PC indicated above. The equipment has a 10-year useful life.It has been used for the past five (5) years before the date of acquisition. Required:a. Prepare the journal entries that both companies should make for the year 20X1.b. Allocate the consolidated comprehensive income at the end…
- (TCO A) Bend Inc. holds 25% of the outstanding voting shares of Calico Co. and appropriately applies the equity method of accounting. Amortization associated with this investment equals $9,000 per year. For 20X3, Calico reported earnings of $80,000 and paid cash dividends of $30,000. During 20X3, Calico acquired inventory for $57,600, which was then sold to Bend for $90,000. At the end of 20X3, Bend still held some of this inventory at its transfer price of $40,000.Required:(1) Determine the amount of intra-entity profit at the end of 20X3.(2) Determine the amount of Equity in Investee Income that Bend should have reported for 20X3.A Ltd pays $90,000 to acquire 90% of the shares of B Ltd on 1 January 20x4 when B Ltd was incorporated with share capital of $100,000 (comprising 100,000 ordinary shares at $1 each). On 1 January 20x8, when the fair value of B Ltd's identifiable net assets was represented by share capital of $100,000 and retained profit of $40,000 and A Ltd's shares are traded at $1.50 per share, A Ltd sells 80% of the shares (and retains 10% of the shares) of B Ltd for cash consideration of $120,000. The 10% shareholding in B Ltd is accounted for as “held-for-trading" securities and the shares are traded at $2 per share on 31 December 20x8. In this case, the fair value gain in A Ltd's consolidated financial statements is: 1. $6,000. 2. None of the listed choices. 3. $10,000. 4. $5,000. $0.Eduardo, a large entity, owns 50% and 20% of Letecia Corporation’s ordinary and preference shares, respectively. Letecia’s shares outstanding at December 31, 2021 follow: Ordinary share, P5,000,000 10% non-cumulative preference share, P1,200,000 Letecia reported net income of P750,000 for the year ended December 31, 2021. What amount should Eduardo report as total revenue related to its investment in Letecia Company for the year ended December 31, 2021?
- Duday Corporation incurred the following transactions relating to investment in Efren Corporation ordinary shares, which Duday acquired for trading purposes. 1st year Purchased 1,000 shares (5% interest in voting shares) at P150 per share, plus transaction costs of P3,750. At year-end, the Efren Corporation ordinary shares had a fair value of P180 per share. 2nd year Sold 500 shares of Efren Corporation at P190 per share, incurring P1,000 transaction costs on the sale. At year-end, the fair value of each share was P192. How much is the unrealized gain/loss on equity investments that is to be reported on the income statement for the 2nd year? (Note: Indicate "( )" if loss)Gaw Company purchased 15% of the common stock of Trace Corporation for $150,000 on 1/1/X1. At the time, Trace's equity included $500,000 of capital stock and $500,000 retained earnings. Gaw selected the fair-value method to account for this investment. On 12/31/X1, Trace's stock had a $1,200,000 total market value. Trace reported net income of $200,000 for year X1 and paid dividends of $60,000 on October 1, X1. How much income should Gaw recognize from its Trace investment in year X1?Jacobson Company is considering an investment in the common stock of Biltrite Company. What are the accounting issues surrounding the recording of income in future periods if Jacobson purchases: a. 15% of Biltrite’s outstanding shares. b. 40% of Biltrite’s outstanding shares. c. 100% of Biltrite’s outstanding shares. d. 80% of Biltrite’s outstanding shares.