Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 15, Problem 2QC
Which of the following investments is most likely classified as a held-to-maturity debt investment?
Learning Objective 1
- 80% stock ownership in a subsidiary
- 100% ownership in voting stock of a supplier
- 10-year bonds
- None of the above
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PROBLEM 4: FOR CLASSROOM DISCUSSION
Financial and Non-financial liabilities
1. Mid-Earth Co.'s liabilities as of December 31, 20x1 include the
following:
Accounts payable
Preference shares issued with mandatory redemption
Unearned income
Utilities payable
Warranty obligation
Deferred tax liability
PhilHealth contribution payable
Obligation to deliver a fixed number of own shares
worth a fixed amount of cash
Share dividends payable
Rent payable
P15,000
100,000
7,000
16,000
7,000
2,000
5,000
12,000
3,000
9,000
Requirement: Compute for the total financial liabilities to be
disclosed in Mid-Earth Co.'s 20x1 notes to financial statements.
An equity investment may be accounted for using the equity method if
the investor has significant influence over the investee. Significant
influence is indicated by ownership of
More than 50%
More than 70%
At least 10%
From 20 to 50%
Accounting for the Equity Investment When Price Exceeds Book Value
Assume an investor purchases all of the stock of the investee in a stock purchase for $1,800. The investee's balance sheet on the date of purchase is as follows:
Accounts receivable $150 Mortgage payable
$150
Inventories
300
Building
1200 Stockholders' equity
1500
Total assets
$1,650 Total liabilities and equity $1,650
In this example, the amount paid (i.e., $1,800) is $300 greater than the book value of the net assets of the investee (i.e., $1,500). Assume the additional $300 of purchase price relates to an unrecognized patent held by the investee that has a remaining useful life of 10 years on the acquisition date. We also assume, subsequent to the purcha
investee reports net income of $300 and pays $90 in dividends to the investor.
Required
a. Provide the journal entry to recognize the Equity Income by the investor.
b. Provide the journal entry to record the receipt of the dividend.
c. Provide the journal entry to…
Chapter 15 Solutions
Horngren's Accounting (12th Edition)
Ch. 15 - Prob. 1QCCh. 15 - Which of the following investments is most likely...Ch. 15 - Prob. 3QCCh. 15 - A company invested $45,000 in Yale Co. stock. The...Ch. 15 - Prob. 5QCCh. 15 - Prob. 6QCCh. 15 - Prob. 7QCCh. 15 - Prob. 8QCCh. 15 - Prob. 9QCCh. 15 - Prob. 10QC
Ch. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQCh. 15 - Prob. 11RQCh. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - Prob. 14RQCh. 15 - Prob. S15.1SECh. 15 - Prob. S15.2SECh. 15 - Prob. S15.3SECh. 15 - Prob. S15.4SECh. 15 - Prob. S15.5SECh. 15 - Prob. S15.6SECh. 15 - Prob. S15.7SECh. 15 - Accounting for debt investments Learning Objective...Ch. 15 - Prob. E15.9ECh. 15 - Prob. E15.10ECh. 15 - Prob. E15.11ECh. 15 - Accounting for equity investments Learning...Ch. 15 - Prob. E15.13ECh. 15 - Prob. E15.14ECh. 15 - Prob. E15.15ECh. 15 - Prob. E15.16ECh. 15 - Prob. E15.17ECh. 15 - Prob. P15.18APGACh. 15 - Prob. P15.19APGACh. 15 - Prob. P15.20APGACh. 15 - Accounting for debt investments Learning Objective...Ch. 15 - Prob. P15.22BPGBCh. 15 - Prob. P15.23BPGBCh. 15 - Prob. P15.24CTCh. 15 - Prob. 25CPCh. 15 - Prob. 15.1TIATCCh. 15 - Prob. 15.1DCCh. 15 - Prob. 15.1EICh. 15 - Prob. 15.1FCCh. 15 - Prob. 15.1FSC
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