Kross Company purchases an equity investment in Penno Company at a purchase price of $2.5 million, representing 40% of the book value of Penno. During the current year, Penno reports net income of $300,000 and pays cash dividends of $100,000. At the end of the year, the fair value of Kross’s invest- ment is $2.65 million. What amount of income does Kross report relating to this investment in Penno for the year? Explain.
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Kross Company purchases an equity investment in Penno Company at a purchase price of $2.5 million, representing 40% of the book value of Penno. During the current year, Penno reports net income of $300,000 and pays cash dividends of $100,000. At the end of the year, the fair value of Kross’s invest- ment is $2.65 million. What amount of income does Kross report relating to this investment in Penno for the year? Explain.
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- During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 lossKross company purchases an equity investment in Penno Company at a purchase price of 5,000,000 millions, representing 34% of the outstanding stock and book value of Penno. During the year, Penno reports net income of 600,000 and pays cash dividends of 200,000. At the end of the year, the market value of Kross's investment is 5,300,000. What amount of income does Kross report relating to this investment in Penno for the year?Champaign Corporation purchases 45% of the common stock of Rockville, Inc. at a purchase price of $17.3 million cash. During the year, Rockville reports net income of $2,368,000 and pays $435, 200 of cash dividends. At the end of the year, the market value of Champaign's investment is $19.0 million. What is the year-end balance of the equity investment in Rockville? Select one: a. $20, 103, 200 b. $18, 169, 760 c. None of these are correct d. $17,300,000 e. $ 20,932,800
- Madison Corporation purchases an investment in Lake Geneva, Inc. at a purchase price of $20 million cash, representing 40% of the book value of Lake Geneva, Inc. During the year, Lake Geneva reports net income of $3,400,000 and pays $838,000 of cash dividends. At the end of the year, the market value of Madison’s investment is $24 million. What is the year-end balance of the equity investment in Lake Geneva? Select one: a. $21,024,800 b. $24,000,000 c. $20,000,000 d. $22,562,000 e. $21,360,000On January 1, 2020, Windsor Company purchased 6,100 shares of Kusher Company stock for $439,200. Windsor's investment represents 30 percent of the total outstanding shares of Kusher. During 2020, Kusher paid total dividends of $152,000 and reported net income of $456,000. What revenue does Windsor report related to this investment and what is the amount to be reported as an investment in Kusher stock at December 31? Revenue $ Investment in Kusher stock at December 31 $Ayayai Corporation purchased a 20% interest in Moss Inc. for $300. This investment gave Ayayai significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss’s net carrying amount when it was acquired.Prepare Ayayai’s journal entries related to this investment using the equity method. Ayayai applies IFRS. (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 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record investment purchase enter a debit amount enter a credit amount enter an account title to record investment purchase enter a debit amount enter a credit amount (To record investment purchase) enter an account title to record investment income enter a debit amount enter a credit…
- BuyCo, Inc., holds 25 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $10,700 per year. For 2020, Marqueen reported earnings of $115,000 and declares cash dividends of $30,000. During that year, Marqueen acquired inventory for $60,000, which it then sold to BuyCo for $75,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $28,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed? (For all requirements, do not round intermediate calculations.)On January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for $196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250. Prepare the entries for Vaughn to record the purchase and any additional entries related to this investment in Bramble Company in 2025. (List all debit entries before credit entries. 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.)BuyCo, Inc., holds 26 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,600 per year. For 2020, Marqueen reported earnings of $108,000 and declares cash dividends of $25,000. During that year, Marqueen acquired inventory for $56,000, which it then sold to BuyCo for $80,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $37,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo's reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed? (For all requirements, do not round intermediate calculations.) Equity in investee income b. Equity accrual for 2021 will be C. If BuyCo had sold the inventory to Marqueen, would your answers above change? a.
- BuyCo, Inc., holds 28 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $12,000 per year. For 2020, Marqueen reported earnings of $119,000 and declares cash dividends of $34,000. During that year, Marqueen acquired inventory for $60,000, which it then sold to BuyCo for $75,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $27,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed? Equity in investee income $19,052selected answer incorrect b. Equity accrual for 2021 will be increasedselected answer correct by $2,117selected answer incorrect c. If BuyCo had sold the inventory to Marqueen, would your answers above…BuyCo, Inc., holds 28 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $12,000 per year. For 2020, Marqueen reported earnings of $112,000 and declares cash dividends of $25,000. During that year, Marqueen acquired inventory for $49,000, which it then sold to BuyCo for $70,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $29,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed?At the beginning of the current year, Zaijan Company acquired an investment property for 48 million. In the acquisition, Zaijan made a 30% down payment and issued a 5-year non-interest-bearing note fore the remainder. The equal amount of 6,720,000 is payable at the end of each year. The prevailing market rate of interest for similar instrument is 12%. To complete the transaction, Zaijan Company paid transaction costs amounting to 500,000. Round off present value factors to three decimal places. What is the correct cost of the investment property at acquisition date?a. 48,000,000b. 39,125,600c. 38,625,600d. 24,225,600