ADV. ACCT CONNECT STAND ALONE
13th Edition
ISBN: 9781266295744
Author: Hoyle
Publisher: MCG
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Chapter 1, Problem 14P
a.
To determine
Find the amount which Company F should report as its Investment in Company S on its December 31, 2018,
b.
To determine
Find the amount which Company F should report as Equity in Earnings of Company S on its 2018 income statement.
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On March 31, 2021, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’s net income for the year ended December 31, 2021, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2021. KT did not declare or pay a dividend during 2021.Required:1. Prepare all appropriate journal entries related to the investment during 2021.2. Assume that Chow sold the stock on January 20, 2022, for $30 million. Prepare the journal entry Chow would use to record the sale.
On January 1, 2021, Fisher Corporation paid $2,877,000 for 35 percent of the outstanding voting stock of Steel, Inc., and appropriately
applied the equity method for its investment. Any excess of cost over Steel's book value was attributed to goodwill. During 2021, Steel
reports $808,000 in net income and a $997,000 other comprehensive income loss. Steel also declares and pays $21,000 in dividends.
a. What amount should Fisher report as its Investment in Steel on its December 31, 2021, balance sheet?
b. What amount should Fisher report as Equity in Earnings of Steel on its 2021 income statement?
Answer is complete but not entirely correct.
a.
Investment
b. Equity in earnings
$ 2,809,500
282,800
On March 31, 2018, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’snet income for the year ended December 31, 2018, was $80 million. The fair value of the shares held by Chow was$35 million at December 31, 2018. KT did not declare or pay a dividend during 2018.Required:1. Prepare all appropriate journal entries related to the investment during 2018.2. Assume that Chow sold the stock on January 20, 2019 for $30 million. Prepare the journal entry Sanbornwould use to record the sale.
Chapter 1 Solutions
ADV. ACCT CONNECT STAND ALONE
Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 3QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 5QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 7QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 13QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Which of the following does not indicate an...Ch. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - In January 2017, Domingo, Inc., acquired 20...Ch. 1 - Prob. 8PCh. 1 - Evan Company reports net income of 140,000 each...Ch. 1 - Perez, Inc., applies the equity method for its 25...Ch. 1 - Prob. 11PCh. 1 - Alex, Inc., buys 40 percent of Steinbart Company...Ch. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - On January 1, 2017, Alison, Inc., paid 60,000 for...Ch. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Echo, Inc., purchased 10 percent of ProForm...Ch. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - Prob. 25PCh. 1 - Prob. 26PCh. 1 - Belden, Inc. acquires 30 percent of the...Ch. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - On July 1, 2016, Killearn Company acquired 88,000...Ch. 1 - Prob. 31PCh. 1 - On January 1, 2017, Stream Company acquired 30...Ch. 1 - EXCEL CASE 1 On January 1, 2018, Acme Co. is...Ch. 1 - Access The Coca-Cola Companys SEC 10-K filing at...Ch. 1 - Prob. 4DYSCh. 1 - Prob. 5DYS
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