On January 1, 2020, Pharoah Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,300,000. At the time, the book value and the fair value of John's net assets were $12,900,000. On July 1, 2021, Pharoah paid $2,890,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Pharoah owns 30% of John and can exercise significant influence over John's operating and financial policies. (Any excess fair value is attributed to goodwill.) John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $650,000 None Six months ended 6/30/21 470,000 None Six months ended 12/31/21 776,000 $1.50 Determine the ending balance that Pharoah Co. should report as its investment in John Corp. at the end of 2021. Investment in Elton John Corp. $

On January 1, 2020, Pharoah Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,300,000. At the time, the book value and the fair value of John's net assets were $12,900,000. On July 1, 2021, Pharoah paid $2,890,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Pharoah owns 30% of John and can exercise significant influence over John's operating and financial policies. (Any excess fair value is attributed to goodwill.) John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $650,000 None Six months ended 6/30/21 470,000 None Six months ended 12/31/21 776,000 $1.50 Determine the ending balance that Pharoah Co. should report as its investment in John Corp. at the end of 2021. Investment in Elton John Corp. $

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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On January 1, 2020, Culver Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,360,000. At the time, the book value and the fair value of John’s net assets were $13,400,000.On July 1, 2021, Culver paid $3,350,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Culver owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $670,000 None Six months ended 6/30/21 480,000 None Six months ended 12/31/21 745,000 $1.65 Determine the ending balance that Culver Co. should report as its investment in John Corp. at the end of 2021.
On January 1, 2020, Stellar Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for $1,340,000. At the time, the book value and the fair value of John’s net assets were $12,000,000.On July 1, 2021, Stellar paid $2,740,000 for 46,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Stellar owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $720,000 None Six months ended 6/30/21 450,000 None Six months ended 12/31/21 742,000 $1.50 Determine the ending balance that Stellar Co. should report as its investment in John Corp. at the end of 2021. Investment in Elton John Corp. $Enter the investment in Elton John Corp. in dollars
On January 1, 2025, Riverbed Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for $1.510.000. At the time, the book value and the fair value of John's net assets were $12,900,000 On July 1, 2026. Riverbed paid $2.760.000 for 46,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Riverbed owns 30% of John and can exercise significant influence over John's operating and financial policies John reported the following net income and declared and paid the following dividends Dividend per Share None Year ended 12/31/25 Six months ended 6/30/26 Six months ended 12/31/26 Net Income $680,000 $20,000 Investment in Eton John Corp 888.000 None $1.50 Determine the ending balance that Riverbed Co should report as its investment in John Corps at the end of 2026
On January 1, 2020, Marin Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,520,000. At the time, the book value and the fair value of John’s net assets were $13,400,000.On July 1, 2021, Marin paid $2,900,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Marin owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $720,000 None Six months ended 6/30/21 450,000 None Six months ended 12/31/21 801,000 $1.60 Determine the ending balance that Marin Co. should report as its investment in John Corp. at the end of 2021. Investment in Elton John Corp.
On January 1, 2020, Sarasota Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for $1,430,000. At the time, the book value and the fair value of John’s net assets were $13,800,000.On July 1, 2021, Sarasota paid $3,220,000 for 46,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Sarasota owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $770,000 None Six months ended 6/30/21 460,000 None Six months ended 12/31/21 820,000 $1.55 Determine the ending balance that Sarasota Co. should report as its investment in John Corp. at the end of 2021. Investment in Elton John Corp. $Enter the investment in Elton John Corp. in dollars
On January 1, 2020, Beyonce Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John's net assets were $13,000,000. On July 1, 2021, Beyonce paid $3,040,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Beyonce owns 30% of John and can exercise significant influence over John's operating and financial policies. John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $700,000 None Six months ended 6/30/21 500,000 None Six months ended 12/31/21 815,000 $1.55 Instructions Determine the ending balance that Beyonce Co. should report as its investment in John Corp. at the end of 2021.
On May 1, 2020, Bear Inc. acquired 1,250 shares of cub Ltd. for $60,000. This investment represents a 14% interest in Cub Ltd. Bear Inc. has classified this investment as FVTLP. On December 31, 2020, Cub Ltd. paid a $50,000 dividend to its shareholders. At June 30, 2021, Cub Ltd.'s shares were valued at $40 per share and Cub Ltd. reported a net loss of $20,000 for the year. On September 15, 2021, Bear Inc. sold the shares for $90,000. Both Bear Inc. and Cub Ltd. have June 30, 2021 year-ends. Prepare dated journal entries for the investment on acquiring the company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
On January 2, 2020, Samantha Company bought 10% of Camille Company's outstanding ordinary shares for $400,000. Samantha Company is the largest single shareholder in Camille Company, and Samantha Company's officers are a majority on Camille Company's board of directors. Camille Company reported net income of $500,000 for 2020, and paid dividends of P150,000. In its December 31, 2020 balance sheet, what amount should Samantha Co. report as investment in Camille Co.?
Panthers Corp.purchased 8,000 shares of Canes Corp.for $100 per share on August 1, 2019. As per IFRS 9, Panthers chose to classify this new investment as FVOCI at the time of the purchase. On November 1, 2019 Canes paid a dividend of $2 per share. At balance sheet date the market price of Canes was $90 per share. On March 1, 2020 Panthers sold all 8,000 shares for $105 per share.RequiredPrepare the journal entries required under IFRS as well as those that would be required under GAAP.
. On January 1, 2020, Santos Ltd. purchased 30% of Yardley Co.'s 50,000 outstanding common shares at a price of $20 per share. This price is based on Yardley's net assets. On June 30, Yardley declared and paid a cash dividend of $60,000. On December 31, 2020, Yardley reported net income of $120,000 for the year. At this time, the shares had a fair value of $23. Santos's year-end is December 31. Required: a. Assuming that Santos does not have any significant influence over Yarder, prepare all the 2020 entries relating to this investment using the FVTPL classification. b. Prepare all the 2020 entries relating to this investment if it was classified as cost due to no active markets. c. Prepare all the 2020 entries relating to this investment assuming that Santos has significant influence over Yarder. Santos uses the equity method of accounting. (Ctrl) -
Jackson Inc. purchased 30,000 shares of common stock of the Pixel Corporation for $10 per share on January 2, 2020. During 2020, Pixel had 100,000 shares of common stock outstanding, reported net income of $200,000, and paid cash dividends of $100,000. The fair value of Pixel stock on December 31, 2020 is $12 per share. On December 31, 2020, what will Jackson report on its Balance Sheet for its investment in Pixel? How much revenue should Jackson report for 2020 on its investment in Pixel? Round your answers to the nearest whole number. Dot not use dollar signs($) or commas(,). Blank # 1 Blank # 2
On January 1, 2020, Santos Ltd. purchased 30% of Yardley Co.’s 50,000 outstanding common shares at a price of $20 per share. This price is based on Yardley’s net assets. On June 30, Yardley declared and paid a cash dividend of $60,000. On December 31, 2020, Yardley reported net income of $120,000 for the year. At this time, the shares had a fair value of $23. Santos’s year-end is December 31. Required: a. Assuming that Santos does not have any significant influence over Yarder, prepare all the 2020 entries relating to this investment using the FVTPL classification. b. Prepare all the 2020 entries relating to this investment if it was classified as cost due to no active markets. c. Prepare all the 2020 entries relating to this investment assuming that Santos has significant influence over Yarder. Santos uses the equity method of accounting.