Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the current year, a portion of this stock is sold to an outside party. Before recording this transaction, Duke adjusts the book value of its investment account. What is the purpose of this adjustment? How would Duke account for the remainder of its investment subsequent to the sale of this partial interest?
Q: On January 1, 2021, Brianne Company acquired 30% of the voting share capital of another entity for…
A: Gain on sale of investment = P 4500000 - (50% x P5000000) = P2000000
Q: Fargus Corporation owned 61% of the voting common stock of Sanatee, Inc. The parent's interest was…
A:
Q: Skysong, Inc. owns 25% of the common shares of Concord Corporation The other 75% of the shares are…
A:
Q: Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the…
A: Fair value of net identifiable assets = Fair value of identifiable assets - Fair value of…
Q: Following is a list of investments owned by Martinez Ltd., as of the company’s year-end, December…
A: Date Account Titles and Explanation Debit Credit Jan 15, 2021 Investment in CTN Corp. $1,850…
Q: On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction…
A: 1.
Q: On January 1, 2020 High acquires 100% of Low in a transaction structured as an acquisition, with Low…
A: Investment refers to buying or accumulation of capital goods such as tools, factories, machinery and…
Q: Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $193,000 and…
A: SOLUTION- JOURNAL ENTRIES IS A RECORD OF BUSINESS TRANSACTIONS IN THE ACCOUNTING BOOKS OF A…
Q: Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $190,000 and…
A: Solution:- Preparation of journal entry for dividend declaration as follows:- Introduction:-…
Q: Dahlia Company has 35,000 ordinary shares of Amelie Corporation as an investment in equity…
A: Realized Gain on Sale:- It is a result of the selling of assets at a price higher than the original…
Q: Moustapha transfers a capital asset with a $60,000 adjusted basis to X Corp in a Section 351…
A: Total basis refers to the amount which is paid in securing as well as holding the particular…
Q: Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to…
A: Part 1:
Q: Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation.…
A: Non-controlling interest: The non-controlling interest can be presented in the financial statements…
Q: Bramble Corporation owns shares of Klank Ltd that are classified as part of Bramble's trading…
A: Property dividend refers to the earnings distributed to the shareholders of the company in the form…
Q: On July 1, 2020, Santo sold half of its stock in Nino for its fair value of P237,000. Thereafter,…
A:
Q: Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the…
A: Working note: Computation of fair value of the previously acquired 15% common stock of K Company:…
Q: On January 1, 2020, MC Company acquired 25% of the ordinary shares that carry voting rights at a…
A: A company has several sources from where it can raise funds. It can issue equity shares and the…
Q: Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the…
A: Total fair value on acquisition date = Purchase of 15% share + Purchase of 60% share + fair value of…
Q: On July 1, 2019, CaviteCorporation purchased 40% of the outstanding ordinary shares of another…
A: Outstanding ordinary shares = P500,000 Net assets of investee = P1,000,000 Fair Value greater than…
Q: Santa corp was keen on acquiring its competitor Barta corp and it has succesfully acquired 80…
A: Companies which are having many subsidiaries or divisions prepare consolidated financial statements…
Q: Tree, Inc., has held a 10 percent interest in the stock of Limb Company for several years. Because…
A: As per relevant standard if an entity makes an investment then which is less than 20% then such…
Q: Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2019, in exchange for $342,000…
A: Consolidated worksheet refers to the measure that is used for preparing the consolidated financial…
Q: Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $195,000 and…
A: Journal entries refers to the process of systematic documentation of the financial transactions of a…
Q: On July 19, 2021, SUNOB acquired 60% of the outstanding shares of YSAE. The business combination…
A: When the fair value of the non-controlling interest is not given then for the purpose of computing…
Q: Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2019, in exchange for $342,000…
A: A business combination is a transaction in which a buyer takes over control of another company (the…
Q: Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $190,000 and…
A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…
Q: ason Ltd holds a 25% interest in the voting shares of Bourne Ltd and applies the equity method of…
A: Investment Of Jason Ltd In Bourne Ltd is 25% and Investment Valued under Equity Method so Goodwill…
Q: Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $193,000 and…
A: An acquisition is quite similar to a takeover, in that one company will purchase the other. It is…
Q: On July 1, 2020, Bar Inc. purchased 50,000 of Tell Inc.’s preference shares in exchange of a tract…
A: As per IFRS 9, Financial instruments, the financial asset classified as a financial asset at fair…
Q: Several years ago, Einstein, Inc., bought 40 percent of the outstanding voting stock of Brooks…
A: a. The book value of the investment on August 1 can be determined by deducting the amount of…
Q: Carnes Co. decided to use the partial equity method to account for its investment in Domino Corp. An…
A: Given in the question: Unamortized trademark = $30,000 Amortizing Years = 10years Earlier carnes co.…
Q: On July 1, 2019, an investor company owns 20% of the common stock of an Investee and can exercise…
A: It was given that after sale of 10% the remaining 10% investment has readily determinable fair…
Q: On July 19, 2021, SUNOB acquired 60% of the outstanding shares of YSAE. The business combination…
A: The goodwill (or) gain on bargain purchase will be considered as full goodwill (or) Full gain on…
Q: Simmons Corporation owns stock of Armstrong, Inc. Prior to 2020, the investment was accounted for…
A: The dividend revenue of $8,000 is obtained by multiplying the net income of $80,000 with the…
Q: On January 2, year 1, an entity purchased a 30% interest in Tod Co. for 250,000. On this date, Tod’s…
A: The equity method is a method used by a company record the profits earned through its investment in…
Q: Gera Corporation owns two financial investments in the shares of listed companies. Details of which…
A: The details of investment of a company are as follows: Investment 1 – Acquired on September 1,…
Q: The retained investment is to be held at FVTOCI. What is the gain on sale of investment that should…
A: the gain on sale of an investment should be P2,000,000 gain from the remeasurement of investment…
Q: Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation.…
A:
Q: On January 1, 2021, Brianne Company acquired 30% of the voting share capital of another entity for…
A: Introduction:- The term "investment" refers to a financial asset formed with the goal of allowing…
Q: On January 1, 2020, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne…
A:
Q: On July 1, 2021, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $110…
A: The acquisition is a term that When a company purchases some other organization's shares. These…
Q: On March 1, 2019, Carol Company bought the common shares of two companies with a 20% ownership share…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Chaney acquires 100% of the voting shares of Roberts on January 1, 2010 in a transaction structured…
A: Contingent Consideration refers to the additional amount payable by the acquirer in addition to the…
Q: On July 1, 2021, Gupta Corporation bought 30% of the outstanding common stock of VB Company for $170…
A: The investment by equity method refers to the accounting method in which assets are recognized at a…
Q: Senpai Company acquires 15% of Kohai Company's common stock for P600,000 cash and carries the…
A: Total fair value on acquisition date = Purchase of 15% share + Purchase of 60% share + fair value of…
Q: Indigo Corporation owns shares of Raccoon Company that are classified as part of Indigo's trading…
A: Change in fair value is recognized as unrealized gain or loss
Q: On January 1, 2020, Orange Co. purchased a 35% interest in Lemon Co. for $800,000. Orange reports…
A: A company can purchase the equity shares of another company for the purpose of investment. If the…
Q: Jones Company owns a 25 percent interest in shares of Sandridge Company common stock. Under what…
A: Investments: Companies invest in stocks and bonds of other companies or governmental entity to…
Q: Pedro Corporation owns an 80% interest in Simon Company. In the consolidated financial statements on…
A: Pedro Corporation owns an 80% share in Simon Company, according to the question. The share capital…
Q: Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the…
A: Goodwill refers to the form of an intangible asset that reflects the overall reputation of the…
Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the current year, a portion of this stock is sold to an outside party. Before recording this transaction, Duke adjusts the book value of its investment account. What is the purpose of this adjustment? How would Duke account for the remainder of its investment subsequent to the sale of this partial interest?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the current year, a portion of this stock is sold to an outside party. Before recording this transaction, Duke adjusts the book value of its investment account. How would the parent record the sales transaction?Blue Spruce Corporation purchased 300 common shares of Burke Inc. for $22,830 and accounted for them using FV-OCI. During the year, Burke paid a cash dividend of $3.45 per share. At year end, Burke shares had a fair value of $72.50 per share. (a) Prepare Blue Spruce's journal entry to record the purchase of the investment. (Credit account titles are automatically indented when the 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. List debit entry before credit entry.) Account Titles and Explanation Debit CreditJon company owns two financial investments in the shares of listed companies. With the following details: Investment 1 - Acquired on september 1, 2020 at a cost of $50,000 with a fair value of $60,000 at year end for the purpose of trading. Investment 2 - Acquired on august 1, 2020 at a cost of $25,000 to hold indefinitely. Its fair value at year end is $20,000. What are the amounts to appear in the statement of Comprehensive Income for the year ended september 30, 2020?
- Gera Corporation owns two financial investments in the shares of listed companies. Details of which are as follows: Investment 1 – Acquired on September 1, 2020, at a cost of P50,000 with a Fair value of P60,000 at year-end for the purpose of trading. Investment 2 - Acquired on August 1, 2020, at a cost of P25,000 to hold indefinitely. Its fair value at year-endis P20,000. What are the amounts to appear in the statement of Profit and Loss for the year ended September 30, 2020?Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the current year, a portion of this stock is sold to an outside party. Before recording this transaction, Duke adjusts the book value of its investment account. What is the purpose of this adjustment?Gera Corporation owns two financial investments in the shares of listed companies. Details of which are as follows: Investment 1 – Acquired on September 1, 2020, at a cost of P50,000 with a Fair value of P60,000 at year-end for the purpose of trading. Investment 2 - Acquired on August 1, 2020, at a cost of P25,000 to hold indefinitely. Its fair value at year-end is P20,000 What are the amounts to appear in the Statement of Financial position for the year ended September 30, 2020?
- On January 1, 2020, Ayayai Corporation purchased 20% of the common shares of Pina Company for $191,000. During the year, Pina earned net income of $71,000 and paid dividends of $17,750. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina 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 O for the amounts.) Account Titles and Explanation Debit Credit (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.)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 lossOn January 2, 2022, Promenade Company purchased 25% of Twilight Company’s ordinary shares; no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight’s investment account was P3,800,000 at December 31, 2022. Twilight reported net income of P2,400,000 for the year and paid dividends amounting to P960,000 during 2022. How much did Promenade pay for its investment in Twilight? Present solution in good accounting form
- On January 2, 2022, Promenade Company purchased 25% of Twilight Company's ordinary shares; no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight's investment account was P3,800,000 at December 31, 2022. Twilight reported net income of P2,400,000 for the year and paid dividends amounting to P960,000 during 2022. How much did Promenade pay for its investment in Twilight?At the beginning of 2021, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $44 million at the time of the change but would have been $56 million if Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change? Would your answer be the same if Pioneer is changing from the equity method rather than to the equity method?On July 1, 2021, PASSETS acquired all the net assets of SIABS at its underlying book value, which resulted to neither a gain nor a goodwill. Considerations transferred included cash paid, bonds issued, and stocks issued. Apart from the transaction to acquire the net assets of and to transfer the consideration to the acquiree, PASSETS also has the following transactions: PASSETS paid P150,000 to SEC to register the newly issued shares PASSETS incurred the obligation to pay P50,000 for printing of the stock certificates of the new shares issued. PASSETS paid Mr. Louis McRasigan P100,000 cash for his professional services in administering the business combination A total of P1,000,000 for general and administrative expenses were incurred by the company, half of which was attributable to the business combination and treated as an unpaid indirect cost. Among the four related transactions above, how much will decrease assets of the acquirer? 200,000 250,000 1,300,000 800,000