Gant Company purchased 30 percent of the outstanding shares of Temp Company for $74,000 on January 1, 20X6. The followingresults are reported for Temp Company:20X6Net income$ 46,00020X7$ 41,000Dividends paid20X8$ 53,00012,00029,00017,000Fair value of shares held by Gant:January 174,00093,00090,000December 3193,00090,000101,000Required:Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment inTemp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp:a. Carries the investment at fair value.b. Uses the equity method.Complete this question by entering your answers in the tabs below.Required A Required BDetermine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant'sinvestment in Temp at the end of each year assuming that Gant uses the equity method in accounting for its investment inTemp.20X620X720X8Income from investment$13,800 $ 12,300 $15,900Balance in investment$84,200

Under the equity method, the investor recognizes its share of the earnings and losses of the…

Answered: Gant Company purchased 30 percent of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Dd.91.
On Jan 2, 20X1, ABC acquired 20% of the 400,000 ordinary shares of Yellow Co at P30 per share. The following data are applicable for 20X1 and 20X2: 20X1 20X2 Yellow dividends 40,000 48,000 Yellow profit 140,000 160,000 Yellow share market price at year end 32 31 On Jan 2, 20X3, ABC sold 20,000 shares of Yellow at its quoted price of P31 per share. How much should be recognized in profit or loss on January 2, 20X3? 9,400 27,000 33,000 37,600
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Year 20X2 20X3 20X4 Winston Corporation Operating Income $100,000 Year 20X2 20X3 20X4 60,000 250,000 Dividends $ 40,000 80,000 120,000 Fullbright Company Dividends Net Income Fair Value Equity Method Net Income $70,000 40,000 25,000 Required: Compute the net income reported by Winston for each of the three years, assuming it accounts for its investment in Fullbright by carrying the investment at fair value, or using the equity method. $30,000 60,000 50,000
Sunshine Inc. has the following transactions pertaining to the common stock. Jan. 1 Bought 40% of Sealand’ 60,000 outstanding shares of common stock at a cost of $12 per share, obtaining significant influence over Sealand Corp April 15 Sealand declared and paid a cash dividend of $45,000. May18 Acquired 5% of the 400,000 shares of common stock of Bluewater Corp. at a total cost of $6 per share June 1 Purchased 500 shares (2% ownership) of Young Company common stock for $30 per share plus brokerage fees of $400. July 1 Sold 100 shares of Young stock for $3,300, less a $50 brokerage fee. Aug.30 Bluewater declared and paid a $75,000 dividend. Oct.1 Received a dividend of $1.25 per share of Young Company. Dec.31 Bluewater Corp. reported net income of $244,000 for the year Dec.31 Sealand reported net income of $120,000 for the year At December 31, the market price of Bluewater Corp was $13 per share and the Young Company was $…
Pagle Corporation holds 80 percent of Standard Company's common shares. The companies report the following balance sheet data for December 31, 20X1: Assets Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Standard Company Stock Total Assets Liabilities and Owners' Equity Accounts Payable Taxes Payable Preferred Stock ($10 par value) Common Stock: $10 par value $5 par value Retained Earnings Total Liabilities and Owners' Equity Pagle Corporation $ 53,000 85,000 126,000 700,000 (295,000) 160,000 $ 829,000 Basic earnings per share Diluted earnings per share $ 120,000 79,000 200,000 100,000 330,000 $ 829,000 Required: Compute basic and diluted EPS for the consolidated entity for 20X1. Note: Round your answers to 2 decimal places. Standard Company $ 43,000 65,000 76,000 330,000 (130,000) $ 384,000 $ 84,000 100,000 An 8 percent annual dividend is paid on the Pagle preferred stock and a 12 percent dividend is paid on the Standard…
Equity investments: 20%–50% ownership On January 2, 20Y4, Whitworth Company acquired 35% of the outstanding stock of Aloof Company for $290,000. For the year ended December 31, 20Y4, Aloof Company earned income of $75,000 and paid dividends of $23,000. On January 31 20Y5, Whitworth Company sold all of its investment in Aloof Company stock for $306,200. Journalize the entries for Whitworth Company for the purchase of the stock, the share of Aloof income, the dividends received from Aloof Company, and the sale of the Aloof Company stock. If an amount box does not require an entry, leave it blank. Jan. 2, 20Y4 - Purchase Investment in Aloof Company Stock Investment in Aloof Company Stock Cash Cash Dec. 31, 20Y4 - Income Investment in Aloof Company Stock Investment in Aloof Company Stock Income of Aloof Company Income of Aloof Company Dec. 31, 20Y4 - Dividends Cash Cash Investment in Aloof Company Stock Investment in Aloof Company Stock…
Odom Ltd purchased a 30% shareholding in Bryant Ltd on 1 Jan 20X7 for $60 000. This purchase resulted in Odom Ltd having significant influence over Bryant Ltd. Bryant's assets were recorded at fair values and its owners' equity, totalling $180 000, was: Share capital $80 000 Reserves $60 000 Retained profits $40 000 During 20X7 Bryant Ltd reported profit of $100 000, from which a dividend of $60 000 was paid. Also, during the year, Bryant revalued its assets upwards by $50 000, and sold inventories to Willams Ltd which is the subsidiary of Odom. Bryant made a profit of $4,000. Half of the inventories were still held by Willams by the year-end. Odom Ltd has an 80% equity interest in Willams Ltd. Required: Prepare journal entries for Odom Ltd to account for its investment in Bryant Ltd using the Equity Method. Use the Reclassification Method to account for the profit and dividends that Odom shares from Bryant. (Using the provided journal entry template to enter your answer;…
g
Reden Corporation purchased 40 percent of Montgomery Company’s common stock on January 1, 20X9, at underlying book value of $262,400. Montgomery’s balance sheet contained the following stockholders’ equity balances: Preferred Stock ($4 par value, 42,000 shares issued and outstanding) $ 168,000 Common Stock ($1 par value, 145,000 shares issued and outstanding) 145,000 Additional Paid-In Capital 189,000 Retained Earnings 322,000 Total Stockholders’ Equity $ 824,000 Montgomery’s preferred stock is cumulative and pays a 5 percent annual dividend. Montgomery reported net income of $95,000 for 20X9 and paid total dividends of $46,000. Required: Give the journal entries recorded by Reden Corporation for 20X9 related to its investment in Montgomery Company common stock. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
How much is the investment balance on December 31?
Nitro Corporation purchased an 80% interest in Mars Company on January 1, 20X5. The following determination and distribution of excess schedule was prepared on the purchase date: Price paid for investment in Mars $160,000 Less book value of interest purchased: Common stock $24,000 Paid in capital in excess of par 41,600 Retained earnings 93,400 Total stockholder’s equity $159,000 Ownership interest 80% 127,200 Excess of cost over book $32,800 Adjustments: Equipment (80%x$20,000)…
Dengar

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