Consolidated Income statement and determination and distribution of excess income schedule
Consolidated Income Statement is that statement which reflects operating activities of business. Through this net profit is identified by the deducting revenue from expenses.
In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.
To calculate:
Through the information given in the question, prepare consolidation income stament with the supporting of determination and distribution of excess schedule.
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Chapter 3 Solutions
Advanced Accounting
- In its first year of operations, Wildhorse Corporation purchased, available-for-sale debt securities costing $65.000 as a long-term investment. At December 31, 2022, the fair value of the securities is $60,500. Show the financial statement presentation of the securities and related accounts. Assume the securities are noncurrent. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45)) WILDHORSE CORPORATION Balance Sheet 4 $arrow_forwardOn January 1,2024 , Richetti Ltd. purchased $232,000 of 11%,10-year bonds at face value (100) with the intention of selling the bonds early the next year. Richetti receives interest semi-annually on July 1 and January 1. At December 31, 2024, which is the company's fiscal year end, the bonds were trading in the market at 98 . Assume that Richetti sold the bonds for $227,360 on January 2 , Record the collection of the interest and the sale of the bonds. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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.) please give me the answer for this question accprding to the given space, i only have one space for debit and credit entryarrow_forwardOn January 1, 2024, Richetti Ltd. purchased $232,000 of 11%, 10-year bonds at face value (100) with the intention of selling the bonds early the next year. Richetti receives interest semi-annually on July 1 and January 1. At December 31, 2024, which is the company's fiscal year end, the bonds were trading in the market at 98. Assume that Richetti sold the bonds for $227,360 on January 2, 2025. Record the collection of the interest and the sale of the bonds. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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.) Date Account Titles and Explanation Jan. 2, 2025 Cash Trading Investments No Entry No Entry Debit 227360 Credit 22736arrow_forward
- During the current year, Reed Consulting acquired long-term available-for-sale debt securities on July 1 at a $70,000 cost. At its December 31 year-end, these securities had a fair value of $58,000. This is the first and only time the company purchased such securities. 1. Prepare the July 1 entry to record the purchase of these debt securities. 2. Prepare the year-end adjusting entry related to these securities.arrow_forwardOn January 1, 2020, the Pacita Corporation purchased equity securities to be held for trading purposes for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. The securities had fair values at December 31, 2020 and 2021, respectively: P1,750,000 and P2,100,000. No securities were sold during 2021. What amount of unrealized gain or loss should be reported in the 2021 profit or loss section of the statement of comprehensive income? P200,000 loss P250,000 loss P350,000 gain P100,000 gain а. b. с. d.arrow_forwardOn January 1, 2016, Star Company received P107,720 for a P100,000 face amount, 12% bond, a price that yields 10%. The bonds pay interest semi-annually. The entity elects the fair value option for valuing financial liabilities. On December 31, 2016, the fair value of the bond is determined to be P106,460. The entity recognized interest expense of P12,000 in the 2016 income statement. What was the gain or loss recognized in the income statement to report this bond at fair value? 13,260 loss 12,000 loss 6,460 gain 1,260 gainarrow_forward
- Cupola Fan Corporation issued 10%, $400,000, 10-year bonds for $385,000 on June 30, 2016. Debt issue costs were $1,500. Interest is paid semiannually on December 31 and June 30. One year from the issue date (July 1, 2017), the corporation exercised its call privilege and retired the bonds for $395,000. The corporation uses the straight-line method both to determine interest expense and to amortize debt issue costs. Required: 1. Prepare the journal entry to record the issuance of the bonds. 2. Prepare the journal entries to record the payment of interest and amortization of debt issue costs on December 31, 2016. 3. Prepare the journal entries to record the payment of interest and amortization of debt issue costs on June 30, 2017. 4. Prepare the journal entry to record the call of the bonds.arrow_forwardOn January 1, 2020, the Stew Corporation purchased equity securities to be held for trading purposes for $2,000,000. The company also paid commissions, taxes and other transaction costs amounting to $50,000. The securities had fair values at December 31, 2020 and 2021, respectively: $1,750,000 and $2,100,000. No securities were sold during 2020. What amount of unrealized gain (loss) should be reported in the 2020 profit or loss section of the statement of comprehensive income?arrow_forwardAt the beginning of 2021, Gala company purchased equity securities to held for trading for P5,000,000. The entity also paid commission, taxes and other transaction costs amounting to P200,000. The securities had a market value of P5,500,000 at year-end. No securities were sold during the year. In the year 2022, 60% of the investments were sold. Proceeds from the sale amounted to P3,450,000 which is net of transaction costs amounting to P125,000. On December 31, 2022, the fair value of the investment is 40% more than the carrying amount at the end of 2021. What total gain/loss on trading securities should be reported in the income statement for 2022? Answer should be presented as: LOSS 123456 or GAIN 123456arrow_forward
- On January 1, 2021, Oak Ridge Ltd. purchased $185,000 of 11%, 10-year bonds at face value (100) with the intention of selling the bonds early the next year. Interest is received semi-annually on July 1 and January 1. At December 31, 2021, which is the company's fiscal year end, the bonds were trading in the market at 99 (this means 99% of maturity value). Using the fair value through profit or loss model, prepare the journal entry to record the purchase of the bonds on January 1. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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.) Date Account Titles and Explanation Jan. 1 eTextbook and Media List of Accounts Date Account Titles and Explanation Prepare the journal entry to record the receipt of the interest on July 1. (List all debit entries before credit entries. Credit account titles are…arrow_forwardDuring the current year, Reed Consulting acquired long-term available-for-sale debt securities on July 1 at a $76,000 cost. At its December 31 year-end, these securities had a fair value of $63,400. This is the first and only time the company purchased such securities. 1. Prepare the July 1 entry to record the purchase of these debt securities. 2. Prepare the year-end adjusting entry related to these securities. View transaction list Journal entry worksheet 1 2 Record purchase of available-for-sale securities. Note: Enter debits before credits. Date July 01 Record entry General Journal Clear entry Debit Credit View general journalarrow_forwardLexington Co. has the following securities outstanding on December 31, 2017 (its first year of operations). Cost Fair Value Greenspan Corp. stock $20,000 $19,000 Summerset Company stock 9,500 8,800 Tinkers Company stock 20,000 20,600 $49,500 $48,400 During 2018, Summerset Company stock was sold for $9,200, the difference between the $9,200 and the “fair value” of $8,800 being recorded as a “Gain on Sale of Investments.” The market price of the stock on December 31, 2018, was Greenspan Corp. stock $19,900; Tinkers Company stock $20,500.Instructions(a) What justification is there for valuing equity securities at fair value and reporting the unrealized gain or loss as part of net income?(b) How should Lexington Co. report this information in its financial statements at December 31, 2017? Explain.(c) Did Lexington Co. properly account for the sale of the Summerset Company stock? Explain.(d) Are there any additional entries necessary for Lexington Co. at December 31,…arrow_forward
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