Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 15, Problem 2BTN
To determine
Prepare a memo to person M and explain the reason why company should correctly report the loss on sale of Company K stock.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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.)
Company A buys $800,000 worth (40%) of the voting stock of Company B in 2019.
Company B reports an annual loss of $475,000 in 2019 and did not pay dividends to A.
in 2020, Company B reports net income of $500,000 and dividends of $100,000.
How does Company A record the investment in Company B and just it on balance sheet?
What does Company A report on the balance sheet for its investment in B at the end of 2020?
An investor company purchased 17,000 of the 50,000 outstanding shares of the investee company's common stock for $338,000 on January 1, 2021. During 2021, the investee company declared dividends of $33,000 and reported earnings for the year of $158,000. If the investor company uses the equity 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.)
Chapter 15 Solutions
Principles of Financial Accounting.
Ch. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Prob. 3MCQCh. 15 - Prob. 4MCQCh. 15 - Prob. 5MCQCh. 15 - Prob. 1DQCh. 15 - Prob. 2DQCh. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Under what conditions should investments be...
Ch. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQCh. 15 - Prob. 11DQCh. 15 - Prob. 12DQCh. 15 - Refer to Googles statement of comprehensive income...Ch. 15 - Prob. 14DQCh. 15 - Which of the following statements are true of...Ch. 15 - Prob. 2QSCh. 15 - Prob. 3QSCh. 15 - Kitty Company began operations in the current year...Ch. 15 - Refer to the information in QS 15-4. (1) After the...Ch. 15 - Prob. 6QSCh. 15 - Prob. 7QSCh. 15 - Prob. 8QSCh. 15 - Prob. 9QSCh. 15 - Prob. 10QSCh. 15 - Prob. 11QSCh. 15 - Prepare Tiker Companys journal entries to record...Ch. 15 - Prob. 13QSCh. 15 - Prob. 14QSCh. 15 - Prob. 15QSCh. 15 - Prob. 16QSCh. 15 - Prob. 17QSCh. 15 - Prob. 18QSCh. 15 - Debt and equity securities and short- and...Ch. 15 - Prob. 2ECh. 15 - Prepare Natura Co.s journal entries to record the...Ch. 15 - Prob. 4ECh. 15 - On December 31, Lujack Co. held the following...Ch. 15 - Prob. 6ECh. 15 - Prob. 7ECh. 15 - Prob. 8ECh. 15 - Prob. 9ECh. 15 - Prob. 10ECh. 15 - Prob. 11ECh. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - Selected accounts from GermX Co.s adjusted trial...Ch. 15 - Prob. 15ECh. 15 - Use the following information of Prescrip Co. to...Ch. 15 - Prob. 17ECh. 15 - Prob. 1APCh. 15 - Mead Inc. began operations in Year 1. Following is...Ch. 15 - Stoll Co.s long-term available-for-sale portfolio...Ch. 15 - Rose Company had no short-term investments prior...Ch. 15 - Prob. 5APCh. 15 - Prob. 6APCh. 15 - Prob. 1BPCh. 15 - Paris Inc. began operations in Year 1. Following...Ch. 15 - Troys long-term available-for-sale portfolio at...Ch. 15 - Prob. 4BPCh. 15 - Prob. 5BPCh. 15 - Prob. 6BPCh. 15 - Prob. 15SPCh. 15 - Prob. 1AACh. 15 - Prob. 2AACh. 15 - Prob. 3AACh. 15 - Prob. 1BTNCh. 15 - Prob. 2BTNCh. 15 - Prob. 3BTNCh. 15 - Prob. 5BTN
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1, 000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50, 000 to retire bonds with a face value (and book value) of 50, 000. e. On July 2, 2019, Farrell purchased equipment for 63, 000 cash. f. On December 31, 2019, land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows. (Appendix 21.1) Spreadsheet and Statement Refer to the information for Farrell Corporation in P21-13. Required: 1. Using the direct method for operating cash flows, prepare a spreadsheet to support a 2019 statement of cash flows. (Hint: Combine the income statement and December 31, 2019, balance sheet items for the adjusted trial balance. Use a retained earnings balance of 291,000 in this adjusted trial balance.) 2. Prepare the statement of cash flows. (A separate schedule reconciling net income to cash provided by operating activities is not necessary.)arrow_forwardComprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1,000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50,000 to retire bonds with a face value (and book value) of 50,000. e. On July 2, 2019, Farrell purchased equipment for 63,000 cash. f. On December 31, 2019. land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows.arrow_forwardOn January 1, 2025, Ayayai Corporation purchased 40% of the common shares of Pina Company for $178,000. During the year, Pina earned net income of $86,000 and paid dividends of $21,500. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina 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.) Account Titles and Explanation (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.) Debit Credit IONarrow_forward
- Oriole Company purchased 300 of the 1000 outstanding shares of Sheffield Company's common stock for $680000 on January 2, 2021. During 2021, Sheffield Company declared dividends of $70000 and reported earnings for the year of $400000.If Oriole Company uses the equity method of accounting for its investment in Sheffield Company, its Equity Investments (Sheffield) account at December 31, 2021 should be $680000. $779000. $800000. $659000.arrow_forwardOn 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.arrow_forwardOn January 1, 2020, Pharoah Corporation purchased 40% of the common shares of Novak Company for $201,000. During the year, Novak earned net income of $77,000 and paid dividends of $19,250.Prepare the entries for Pharoah to record the purchase and any additional entries related to this investment in Novak Company in 2020. (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 0 for the amounts.) Account Titles and Explanation Debit Credit (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.)arrow_forward
- Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $600,000 on January 2, 2021. During 2021, Darby Company declared dividends of $100,000 and reported earnings for the year of $400,000. If Blanco Company used the fair value method of accounting for its investment in Darby Company, its Equity Investments (Darby) account on December 31, 2021 should be: a. $580,000 b. $660,000 c. $600,000 d. $680,000 If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Equity Investments (Darby) account at December 31, 2021 should be: a. $580,000 b. $600,000 c. $660,000 d. $680,000arrow_forwardAn investor company purchased 121,000 of the 250,000 outstanding shares of the investee company's common stock for $79,000 on January 1, 2021. During 2021, the investee company declared and paid dividends of $55,000 and reported earnings for the year of $355,000. If the investor company uses the equity method of accounting for its investment in the investee company, its Equity Investment in the investee company account at December 31, 2021 should be $____________. (Do not round your answer for any part of the computation.)arrow_forwardAn investor company purchased 180,000 shares of common stock of the investee company on January 2, 2021. The investee company had 500,000 shares of common stock outstanding during 2021, declared and paid cash dividends of $241,000 during 2021, and reported net income of $738,000 for 2021. If the investor company uses the equity method of accounting for its investment in the investee company, the investor company should report revenue from investment (or Investment Income) for 2021 in the amount of $___________________. (Do not round your answer for any part of the computation.)arrow_forward
- On January 1, 2020, Ayayai Corporation purchased 20% of the common shares of Pina Company for $191,000. During the year, Pina earned net income of $71,000 and paid dividends of $17,750. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina Company in 2020. (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.) Account Titles and Explanation Debit Credit (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.)arrow_forwardMiller Corporation acquired 30% of ilie outstanding common stock of Crowell Corporation for $160,000 on January 1, 2019, and obtained significant influence. The purchase price of the shares was equal to ilieir book value. During 2019 ilie following information is available for Crowell: 1. Prepare journal entries for Miller to reflect the preceding information. 2. what is the balance in millier's investment account on December 31, 2019? Show your computations.arrow_forwardOn 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.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning