Exercise 12-20 (Algo) Equity method; purchase; investee income; dividends [LO12-6] As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 25% of Nursery Supplies Incorporated's 8 million shares for $62 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $48 million and distributed cash dividends of $2.50 per share. At the end of the year, the fair value of the shares is $58 million. Required: Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10). No 1 2 3 4 Transactions 1 2 3 4 Answer is not complete. General Journal Gain on investment (NI) X Cash✔ Cash Debit 62✔ 12✔ 20 x 2 X Credit 62 12✔ 20 2 x
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- INVESTMENT IN ASSOCIATE Problem 7 On January 1, 2020, Elite Company paid P 18,000,000 for 50,000 ordinary shares of Craze Company which represent a 25% interest in the in the net assets of Craze. The acquisition cost is equal to the carrying amount of the net assets acquired. Elite has the ability to exercise significant influence over Craze. Elite received a dividend of P35 per share from Craze in 2020. Craze reported net income of P9,600,000 for the year ended December 31, 2020. In the December 31, 2020 statement of financial position, what amount should be reported as investment in Craze Company? a. 22,150,000 b. 20,400,000 c. 18,650,000 d. 18,000,000 Problem 8 On July 1, 2015, Denver Company purchased 30,000 shares of Eagle Company's 100,000 outstanding ordinary shares for P200 per share. On December 15, 2015, Eagle paid P400,000 in dividends to its share ordinary shareholders. Eagle's net income for the year ended December 31, 2015 was P1,200,000, earned evenly throughout the…Exercise 12-20 (Algo) Equity method; purchase; Investee Income; dividends [LO12-6] As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 25% of Nursery Supplies Incorporated's 20 million shares for $61 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $44 million and distributed cash dividends of $1.40 per share. At the end of the year, the fair value of the shares is $57 million. Required: Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answer in millions, (i.e., 10,000,000 should be entered as 10). No 1 Transactions 1 Investment revenue Cash Answer is not complete. General Journal ** Debit 61,000,000 Credit 61,000,000Exercise 12-20 (Algo) Equity method; purchase; investee income; dividends [LO12-6] As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 20% of Nursery Supplies Incorporated's 20 million shares for $69 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.50 per share. At the end of the year, the fair value of the shares is $65 million. L Required: Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered 10). View transaction list Journal entry worksheet 1 2 3 Record the inve Note: Enter debits b Transactions No journal entry required Cash Fair value adjustment Gain on investment (NI) Debit Prev…
- Problem 16-3 (IAA) Effective Company had the following long-term investments at the beginning of the current year: Investment in SMC preference shares, 12% P200 par, 5,000 shares Investment in Benguet ordinary shares, 10,000 shares 1,200,000 1,000,000 During the current year, the following transactions were completed: 1. Purchased 4,000 ordinary shares of ANA Company for P300,000. 2. Received 2,000 ordinary shares of Benguet Company in lieu of a cash dividend of P10 per share. On this date, Benguet ordinary share has a quoted market of P60. 3. Purchased 6,000 ordinary shares of ANA Company for P420,000. 4. Received semiannual dividend on SMC Company 12% preference share. 5. ANA ordinary share was split on a 2-for-1 basis. 6. Sold 8,000 ordinary shares of ANA Company at P85 less transaction costs of 5%. Use average approach. Required: a. Prepare journal entries to record the transactions. b. Prepare a summary of the portfolio of investments stating the number of shares and the…1 16 On January 1, 2024, Clor-Proell Enterprises bought 20% of the outstanding common stock of Chen Construction Company for $600 million cash. Chen's net income for the year ended December 31, 2024, was $300 million. During 2024, Chen declared and paid cash dividends of $60 million. Clor-Proell recorded the investment as follows: points PURCHASE General Journal ($ in millions) Debit Credit Investment in Chen Construction shares Cash 600 600 eBook NET INCOME Investment in Chen Construction shares (20% x $300 million) 60 Investment revenue 60 DIVIDENDS Hint Cash (20% x $60 million) 12 Investment in Chen Construction shares 12 Required: Print References What would be the pretax amounts related to the investment that Clor-Proell would report in its statement of cash flows for the year ended December 31, 2024? Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated with a minus sign. Operating activities $ 600 Investing activities…What amount of income from the investment should be Problem 17-11 (AICPA Adapted) On July 1, 2021, Focus Company purchased 30,000 shares of Eagle Company's 100,000 outstanding ordinary shares for P200 per share. On December 15, 2021, Eagle Company paid P1,000,000 dividends. Eagle Company's net income for 2021 wee P5,000,000 earned evenly throughout the year. reported for the current year? a. 500,000 b. 300,000 c. 750,000 d. 150,000 518
- Exercise 12-22 (Algo) Equity method; adjustment for depreciation [LO12-6, 12-7] Fizer Pharmaceutical paid $85 million on January 2, 2024, for 5 million shares of Carne Cosmetics common stock. The investment represents a 20% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $3 per share on December 21, 2024, and Carne reported net income of $35 million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was $35.50 per share. • The book value of Carne's net assets was $210 million. The fair value of Carne's depreciable assets exceeded their book value by $50 million. These assets had an average remaining useful life of ten years. • The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries…Exercise 12-22 (Algo) Equity method; adjustment for depreciation [LO12-6, 12-7] Fizer Pharmaceutical paid $85 million on January 2, 2024, for 5 million shares of Carne Cosmetics common stock. The investment represents a 20% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $3 per share on December 21, 2024, and Carne reported net income of $35 million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was $35.50 per share. • The book value of Carne's net assets was $210 million. • The fair value of Carne's depreciable assets exceeded their book value by $50 million. These assets had an average remaining useful life of ten years. • The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries…EQUITY INVESTMENTS Problem 4 On January 1, 2018, ABC Company purchased 40,000 shares of RST at P100 per share. The investment in measurement at fair value through other comprehensive income. Brokerage fees measured to P120,000. A P5 dividend per share of RST had been declared on December 15, 2017 to be paid on March 31, 2018 to shareholders of record on January 31, 2018. No other transactions occurred in 2018 affecting the investment in RST shares. What is the initial measurement of the investment? 4,120,000 a. b. 4,000,000 c. 3,920,000 d. 3,800,000 Problem 5 Care Company received dividends from its share investments during the year ended December 31, 2011 as follows: • A stock dividend of P4,000 shares from Part Company on July 31, 2011 when the market price of Part's share was P20. Care owns less than 1% of Part's share capital. • A cash dividend of P150,000 from Shark Company in which Day owns a 25% interest. Majority of Shark's director are also directors of Care. What amount of…
- ↑ 3 minutes ago ☆ Live Large Inc. had the following transactions involving non-strategic investments during 2023. 2023 Apr. 1 Paid $100,ese to buy a 90-day term deposit, $100,000 principal amount, 5.0%, dated April 1. There was a $50 transaction fee included in the above-noted payment amount. 12 Purchased 3,000 common shares of Blue Balloon Ltd. at $22.25. There was a $50 transaction fee included in the above-noted payment amount. June 9 Purchased 1,800 common shares of Purple Car Corp. at $49.50. There was a $50 transaction fee included in the above-noted payment amount. 20 Purchased 700 common shares of Yellow Tech Ltd. at $15.75. There was a $50 transaction fee included in the above-noted payment amount. July 1 Purchased for $67,412 a 7.0%, $65,000 Space Explore Inc. bond that matures in eight years when the market interest rate was 6.4%. There was a $50 transaction fee included in the above-noted payment amount. Interest is paid semiannually beginning December 31, 2023. Live Large…1. Nicole Company acquires 75% of Carl John Company (CJC) for P6,000,000. The carrying and fair values of CJC's net assets at the time of acquisition are P4,500,000 and P4,900,000, respectively. Required: a. Determine the goodwill or gain on bargain purchase assuming the consideration paid includes control premium of P852,000. b. Determine the goodwill or gain on bargain purchase assuming the consideration paid excludes control premium of P138,000 and the fair value of the non-con- trolling interest is P736,500. 3. Father Corporation (FC) acquires 20% ownership interest in Son Corporation (SC) on January 1, 202X, for P1,750,000 cash, which is the fair value of the investment at that date. FC has concluded that it does not have a significant influence over SC. At the same date, the fair and carrying values of SC's identifiable assets is P5,000,000 and P3,000,000. The identifiable assets include land, which has fair and carrying values of P4,000,000 and P3,000,000, respectively. For the…PROBLEM 34 On January 1, 2020, Edelyn Corporation acquired 10,000 shares of JKL Company for P500,000. The 10,000 shares are equivalent to 20% interest of the investee. JKL Company reported the following net income or loss: 2020 - P1,000,000 - (P5,000,000) 2022 - P300,000 2021 Requirements: 1. Prepare the necessaryjoumal entries to record the share of income or loss in 2020, 2021, and 2022. 2 What is the carrying value ofthe investment on December 31, 2020? December 31, 2021? December 31, 2022?