On July 1, 2021, Bird Inc., a private enterprise, acquired 1,250 shares of Duck Ltd. for $75,000. This investment ck Ltd. for $ represents a 14% interest in Duck Ltd. and Bird Inc. uses the cost method to record the investment. On October 31, 2021, Duck Ltd. paid a $50,000 dividend to its shareholders. At December 31, 2021, Duck Ltd.'s shares were valued at $40 per share and Duck Ltd. reported a net loss of $50,000 for the year. On March 15, 2021, Bird Inc. sold the shares for $125,000. Both Bird Inc. and Duck Ltd. have December 31, 2021 year-ends. ©At Required: Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional. tenore indsted journis denfrenter for Distribution

On July 1, 2021, Bird Inc., a private enterprise, acquired 1,250 shares of Duck Ltd. for $75,000. This investment ck Ltd. for $ represents a 14% interest in Duck Ltd. and Bird Inc. uses the cost method to record the investment. On October 31, 2021, Duck Ltd. paid a $50,000 dividend to its shareholders. At December 31, 2021, Duck Ltd.'s shares were valued at $40 per share and Duck Ltd. reported a net loss of $50,000 for the year. On March 15, 2021, Bird Inc. sold the shares for $125,000. Both Bird Inc. and Duck Ltd. have December 31, 2021 year-ends. ©At Required: Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional. tenore indsted journis denfrenter for Distribution

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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On January 1, 2021, Familia purchased 1,600 ordinary shares of another entity for P2,000,000. At December 31, 2021, the investee’s shares were selling for P1,400 per share. Familia irrevocably designated to classify equity investment at FVOCI. On October 1, 2022, Familia sold half of its shares at P1,800 per share. At December 31, 2022, the shares were selling at P1,900 per share. What amount is recognized in retained in retained earnings as a result of the disposal in 2022
On January 1, 2021, Pepita Corporation purchased 25% of the outstanding voting shares of Pablito Supplies common stock for $210,000 cash. On that date, Pablito's book value and fair value were both $840,000. The equity method is deemed appropriate for this investment. Pablito's net income reported on December 31, 2021, was $100,000. During 2021, Pablito also paid cash dividends in the amount of $30,000. Required: Prepare the journal entries necessary to record the above information on Pepita Corporation's books during 2021.
On January 1, 2021, an investor company acquired 25% of an investee company's common stock for $2,880, 000. As a result of this transaction, the investor can exert significant influence over the investee. During each year ended December 31, 2021 and 2022 the investee reported $576,000 of net income and $240,000 of dividends. On January 1, 2021, the book value of the investee's net assets was $9,600,000 and all individual net assets had appraised fair values that equaled their reported book values. On December 31, 2022, what is the balance of the Equity Investment account on the Investor's balance sheet? Select one: a. $3,048, 000 b. $2,880, 000 c. $3,552,000 d. $2,964,000
Tamarisk Inc., a public company, owns 20% of Dong Ltd's common shares for strategic purposes. The investment's carrying amount at January 1, 2024, is $299,000. During the year, Dong reported profit of $255,400 and paid a dividend of $22,400. The investment's fair value on December 31, 2024, Tamarisk's year end, is $316,100. (a) Assuming Tamarisk has significant influence over Dong, indicate the amount reported on the balance sheet for the investment at December 31 and the amount of income from this investment reported in the income statement. Balance Sheet: Income Statement: eTextbook and Media $ Equity Method
On March 15, 2021, Smith Corp. (Smith) purchased 18,000 common shares of Costa Inc. (CI) for $72,000, plus transaction costs of $6,000. Smith elected to record the shares of Cl at fair value through other comprehensive income. On July 15, 2021, Smith received a $1.50 per share dividend. At December 31, 2021, the fair value of Cl's shares was $7.00 per share. On February 15, 2022, all the shares of CI were sold for $12.00 per share due to the favourable market rate of the shares. Smith's policy is to transfer the net balance of accumulated other comprehensive income to retained earnings upon derecognition of the investment in Cl's shares. Smith reports under IFRS. Required: a) Prepare all journal entries necessary for the investment-related transactions in 2021. b) Prepare all journal entries necessary for the sale of the shares on February 15, 2022.
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On January 1, 2021, American Corporation purchased 30% of the outstanding voting shares of Short Supplies common stock for $231,000 cash. On that date, Short's book value and fair value were both $770,000. The equity method is deemed appropriate for this investment. Short's net income reported on December 31, 2021, was $73,000. During 2021, Short also paid cash dividends in the amount of $20,500. Required:Compute the amount that would be reported for the investment on American Corporation's financial statements at December 31, 2021.
An investor company purchased 60,000 of the 500,000 outstanding shares of the investee company's common stock on January 1, 2021. During 2021, the investee company reported earnings for the year of $459,000, and declared and paid an $0.52 per share cash dividend during 2021. If the investor company uses the fair value method of accounting for its investment in the investee company, it should report Dividend Revenue from the investee for 2021 in the amount of $_______. (If there is no Dividend Revenue, then enter 0. Do not round your answer for any part of the computation.)
On 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 $
On January 1, 2022, Mojito Corporation purchased 20% (20,000 shares) of the outstanding stock of Dulcinea Corporation for $153,000. During 2022, Dulcinea Corporation paid total dividends of $45,000 and earned $80,000 in net income. At the end of 2022, Dulcinea Corporation’s stock had a fair market value of $155,000. Required: Prepare the journal entries that Mojito would make during 2022 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (i.e. fair value method). Prepare the journal entries that Mojito would make during 2022 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method).
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.
Oriole Company owns 3100 of the 10000 outstanding shares of Skysong Corporation common stock. During 2021, Skysong earns $360000 and pays cash dividends of $141000.Oriole should report investment revenue for 2021 of $111600. $141000. $67890. $43710.