**Investment Accounting in Band Inc. for Year 1**In this section, we will walk through the process of preparing the necessary journal and adjusting entries related to investments made in Band Inc. during Year 1. This is a critical part of keeping accurate financial records and ensuring compliance with accounting principles.---*For Year 1, prepare any journal and adjusting entries related to the investment in Band Inc.*---Follow these steps:1. **Initial Investment Entry**: Record the original investment in Band Inc. - **Debit**: Investment in Band Inc. account - **Credit**: Cash or Bank account2. **Dividend Received Entry**: If any dividends are received from Band Inc., record them. - **Debit**: Cash or Dividend Receivable account - **Credit**: Dividend Income account3. **Adjusting Entries**: At the end of the year, make any necessary adjustments, such as for market value changes or accruals. - **Debit/Credit**: Adjustment accounts as per market value changes - **Credit/Debit**: Investment in Band Inc. account4. **Income from Investment**: Recognize any income earned from the investment during the year. - **Debit**: Investment in Band Inc. account - **Credit**: Income from Investment account---Ensure to review the specific financial guidelines and standards applicable to your region or organization for detailed procedures and compliance. This process helps to present a true and fair view of the financial position regarding investments in the company's financial statements. ### Investment Activities of Parade Corp. Related to Band Inc.**Overview:**Parade Corp. has a fiscal year ending on December 31. The following outlines the investment activities between Parade Corp. and Band Inc. over the span of approximately one year.*Year 1:*- **January 2:** - Parade Corp. invested $5,000,000 in Band Inc. by purchasing 400,000 shares of stock. - This investment represents 40% of Band Inc.’s total outstanding stock.- **December 31:** - Band Inc. achieved $800,000 in net income for the year. - Band Inc. declared and distributed dividends totaling $500,000 for Year 1.*Year 2:*- **March 5:** - Parade Corp. sold all 400,000 shares of Band Inc. stock at a price of $20 per share. **Diagram/Graph:**Note: No diagrams or graphs accompany this text. The provided data is presented in a tabular format, which is summarized above for clarity.---This transcription preserves the financial details and timeline of Parade Corp.'s investment for educational purposes.

Journal Entries:Journal entries are the systematic recordings of business transactions in the…

The following investment activities relate to Parade Corp. Parade has a December 31 year end. Year 1: January 2 December 31 December 31 Year 2: March 5 Parade Corp. paid $5,000,000 cash to acquire 400,000 shares of stock in Band Inc.; these shares represent 40% of Band Inc.'s total outstanding stock. Band Inc. earned $800,000 in net income for Year 1. Band Inc. declared and paid $500,000 in dividends for Year 1. Parade sold all 400,000 shares of the Band Inc. stock for $20 per share

The following investment activities relate to Parade Corp. Parade has a December 31 year end. Year 1: January 2 December 31 December 31 Year 2: March 5 Parade Corp. paid $5,000,000 cash to acquire 400,000 shares of stock in Band Inc.; these shares represent 40% of Band Inc.'s total outstanding stock. Band Inc. earned $800,000 in net income for Year 1. Band Inc. declared and paid $500,000 in dividends for Year 1. Parade sold all 400,000 shares of the Band Inc. stock for $20 per share

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Company A paid $85 million on January 2 of the current year for 4 million shares of Company B's common stock. The Investment represents a 30% Interest in the net assets of Company B and gave Company A the ability to exercise significant influence over Company B's operations. Company A received dividends of $2 per share on December 21 of the current year, and Company B reported net income of $50 million for the year ended December 31 of the current year. The fair value of Company B's common stock at December 31 of the current year was $26.50 per share. The book value of Company B's net assets was $200 million. • The fair value of Company B's depreciable assets exceeded their book value by $40 million. These assets had an average remaining useful life of twelve 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 related to…
Fairbanks Corporation purchased 400 ordinary shares of Sherman Inc. as a trading investment for E13,200. During the year, Sherman paid a cash dividend of £3.25 per share. At year-end, Sherman shares were selling for £34.50 per share. How much total revenues (all revenues) should be recognized from this investment during the year? Select one: Oa. $1900 Ob. $700 OC $1300 Od. $600
Lauralee, Inc. owns a 30% interest in Eastwood Co., giving it representation on the investee’s board of directors. At the beginning of the year, the Equity Investment was carried on Lauralee’s balance sheet at $500,000. During the year, Eastwood reported net income of $250,000 and paid Lauralee a dividend of $50,000. In addition, Lauralee sold inventory to Eastwood, recording a gross profit of $20,000 on the sale. At the end of the year, 50% of the merchandise remained unsold by Eastwood. Required: a. Prepare the equity method journal entry to defer the unrealized inventory gross profit.b. How much equity income should Lauralee report from Eastwood during the year?c. What is the balance in the Equity Investment at the end of the year?
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 430,000 shares for $510,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal. During the year, AMC earned net income of $280,000 and distributed cash dividends of 15 cents per share. At year-end, the fair value of the shares is $538,000. Required: 1. Assume no significant influence was acquired. 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. View transaction list Journal entry worksheet 1 2 3 4 Record the purchase of AMC Supplies shares for $510,000 as a long-term investment. Note: Enter debits before credits. Transactions General Journal Debit Credit
Please help me
At the beginning of the year, the Carolyn Brewery of Melbourne, Australia purchased a 25 percent ownership interest in Amber Pub of Brisbane, Australia. The investment cost $12 million. At year- end, Amber Pub declared and paid cash dividends to shareholders totaling $320,000, after reporting earnings of $2.0 million. A. Calculate the income statement effect of Carolyn's investment in Amber Pub as of year-end. B. Calculate the book value of Carolyn's equity investment in Amber Pub at year-end. C. Calculate the book value of Carolyn's equity investment in Amber Pub at year-end assuming that Down Under reported a loss of $1.2 million instead of a profit of $2.0 million and still paid vidend $320,000.
An investor company owns 40% of the outstanding common stock of an investee company, which allows the investor to exercise significant influence over the investee. The Equity Investment was reported at $1,050,000 as of the end of the previous year. During the year, the investor received dividends of $110,000 from the investee. The investee reports the following income statement for the year: Revenues Expenses $2,700,000 1,800,000 900,000 100,000 Comprehensive income $1,000,000 a. How much equity income should the investor report in its net income (i.e., as part of the current year income statement)? Net income Other comprehensive income $0 b. What amount should the investor report for the Equity Investment in its balance sheet at the end of the year? $0
On January 2, 20Y4, Whitworth Company acquired 37% of the outstanding stock of Aloof Company for $320,000. For the year ended December 31, 20Y4, Aloof Company earned income of $83,000 and paid dividends of $26,000. On January 31 20Y5, Whitworth Company sold all of its investment in Aloof Company stock for $338,090. 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 - Select - - Select - - Select - - Select - Dec. 31, 20Y4 - Income - Select - - Select - - Select - - Select - Dec. 31, 20Y4 - Dividends - Select - - Select - - Select - - Select - Jan. 31, 20Y5 - Sale - Select - - Select - - Select - - Select - - Select - - Select -
What total amount shall be reported in profit or loss in the Inn Corporation had 30,000 ordinary shares of NPA Company which it acquired during Year 2 for a total consideration of P1,800,000, including P30,000 directly attributable costs. The shares were acquired for trading purposes. On December 31, Year 2, the NPA shares were selling at P65 per share. In July Year 3, Inn Corporation received a 20% bonus issue. Subsequently during the year, it sold 15,000 shares at 70 per share. The fair value of NPA ordinary at December 31, Year 3 was P72 per share. Required: statement of comprehensive income for Year 3?
i.3
RR Company purchased 12,000 common shares of SS Inc. on January 1, Year 1 for $180,000. SS inc. had 80,000 common shares outstanding. The following information relates to SS Inc.: Net Income (loss) $300,000 $(180,000) Dividends paid Market value/share at December 31 $75,000 $40,000 Year 1 $17 $18 Year 2 On January 1, Year 3, RR sold Investment in SS Inc. shares for $20 per share. RR has a December 31 year end. Required: Show all calculations for full marks. i) Prepare the journal entries for Years I and 2 and on January 1, Year 3 assuming the RR elects to use FVOCI to account for its investment in SS ii) How much is the change in Retained Earnings from January 1, Year 1 to January 1, Year 3? Show all #s for each year to support your total change.
West Asset Management Inc. purchased a stock at $78.26 per share at the beginning of the year and held the stock for one year. At the end of the year, West Asset Management sold all of its holdings for this stock at $83.26 per share and received a dividend of $4.25 per share. What was West Asset Management’s total investment return for this stock in the holding period? A. 6.39% B. 15.64% C. 11.82% D. 5.43%