Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 4, Problem 13P
To determine
Identify the appropriate answer for the given statement from the given choices.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On May 20, Montero Co. paid $150,000 to acquire 30 shares (4%) of ORD Corp. as a long-term investment. On August 5, Montero sold one-tenth of the ORD shares for $18,000. 1. Prepare entries to record both (a) the acquisition and (b) the sale of these shares. 2. Should this stock investment be reported at fair value or at cost on the balance sheet?
Choose the correct. McKinley, Inc., owns 100 percent of Jackson Company’s 45,000 voting shares. On June 30, McKinley’s internal accounting records show a $192,000 equity method adjusted balance for its investment in Jackson. McKinley sells 15,000 of its Jackson shares on the open market for $80,000 on June 30. How should McKinley record the excess of the sale proceeds over its carrying amount for the shares?a. Reduce goodwill by $64,000.b. Recognize a gain on sale for $16,000.c. Increase its additional paid-in capital by $16,000.d. Recognize a revaluation gain on its remaining shares of $48,000.
Choose the correct. On January 1, Puckett Company paid $1.6 million for 50,000 shares of Harrison’s voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies the equity method. Harrison declared a $2 per share dividend during the year and reported net income of $560,000. What is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31?a. $1,724,000b. $1,784,000c. $1,844,000d. $1,884,000
Chapter 4 Solutions
Fundamentals of Advanced Accounting
Ch. 4 - Prob. 1QCh. 4 - Atwater Company acquires 80 percent of the...Ch. 4 - What is a control premium and how does it affect...Ch. 4 - Prob. 4QCh. 4 - How is the noncontrolling interest in a subsidiary...Ch. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Prob. 9QCh. 4 - Prob. 10Q
Ch. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Current liabilities: a. 50,000 b. 46,000 c. 40,000...Ch. 4 - Prob. 20PCh. 4 - Stockholders equity: a. 80,000 b. 90,000 c. 95,000...Ch. 4 - Prob. 22PCh. 4 - Prob. 23PCh. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - Prob. 31PCh. 4 - Prob. 32PCh. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - Prob. 38PCh. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Prob. 42PCh. 4 - Prob. 1DYS
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
- Marigold Corporation purchased 630 common shares of Ditch Inc. for $12,900 on February 21. Marigold paid a 1% commission on the share purchase and, because the shares were not publicly traded, decided to account for them following the cost model. On June 30, Ditch declared and paid a cash dividend of $1.90 per share. (a) Prepare Marigold Corporation's journal entry to record the purchase of the investment. (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. List debit entry before credit entry.) Date Account Titles and Explanation Feb. 21 Debit Creditarrow_forward26. On January 1, B company paid $2,295,000 to acquire 90,000 shares of O company's voting common stock, which represents a 30 percent investment. No allocations to goodwill or other specific accounts were made. Significant influence over O company is achieved by this acquisition, and so B company applies the equity method. O company declared a $1 per share dividend during the year and reported net income of $750,000. What is the balance in the Investment in O company account found in B company's financial records as of December 31?arrow_forward1 On January 1, Belleville Company paid $1,710,000 to acquire 57,000 shares of O'Fallon's voting common stock, which represents a 40 percent investment. No allocations to goodwill or other specific accounts were made. Significant influence over O'Fallon is achieved by this acquisition, and so Belleville applies the equity method. O'Fallon declared a $3 per share dividend during the year and reported net income of $590,000. What is the balance in the Investment in O'Fallon account found in Belleville's financial records as of December 31? Skipped References Multiple Choice O $1,946,000. $1,775,000. $1,895,000. $1,835,000.arrow_forward
- Blue Spruce Corporation purchased 300 common shares of Burke Inc. for $22,830 and accounted for them using FV-OCI. During the year, Burke paid a cash dividend of $3.45 per share. At year end, Burke shares had a fair value of $72.50 per share. (a) Prepare Blue Spruce's journal entry to record the purchase of the investment. (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. List debit entry before credit entry.) Account Titles and Explanation Debit Creditarrow_forwardCheck my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completio Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $216,000. At that date, the fair value of the noncontrolling interest was $144,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common stock for $100,000. Summarized balance sheets for Split on the dates Indicated are as follows: 20X7 Assets Cash Accounts Receivable Inventory Buildings & Equipment (net) $ 44,000 57,000 78,000 350,000 Total Assets Accounts Payable Bonds Payable $ 529,000 Liabilities & Equities Common Stock Retained Earnings Total Liabilities & Equities December 31 20X8 20X9 $ 64,000 105,000 155,000 205,000 $ 74,000 97,000 108,000 330,000 $ 609,000 $ 114,000 105,000 155,000 235,000 $ 94,000 127,000 168,000 310,000 $ 699,000 $ 154,000 105,000 155,000 285,000 $ 529,000 S 609 000 $ 699,000 Split paid dividends of $21,000…arrow_forwardOn January 1, Puckett Company paid $1.6 million for 50,000 shares of Harrison’s voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies the equity method. Harrison declared a $2 per share dividend during the year and reported net income of $560,000. What is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31? $1,724,000 $1,784,000 $1,844,000 $1,884,000arrow_forward
- On July 10, 2021, Romantic Co. acquired 25,000 shares of Baboy Co. for P200,000. Romantic Co does not have significant influence over Baboy Co. The entity also spent additional P15,000 transaction cost. Romantic Co. entity made an irrevocable election of the instrument to be classified as FVOCI. On October 15, 2021, the Romantic Co. sold 15,000 shares for P10.5/share. At year- end, Baboy Co.'s shares were selling at P12 per share. How much is the total amount to be recognized as other comprehensive income in the statement of comprehensive income for the year ?arrow_forwardOn January 2, 2022, Promenade Company purchased 25% of Twilight Company's ordinary shares; no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight's investment account was P3,800,000 at December 31, 2022. Twilight reported net income of P2,400,000 for the year and paid dividends amounting to P960,000 during 2022. How much did Promenade pay for its investment in Twilight?arrow_forwardOn January 2, 2022, Promenade Company purchased 25% of Twilight Company’s ordinary shares; no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight’s investment account was P3,800,000 at December 31, 2022. Twilight reported net income of P2,400,000 for the year and paid dividends amounting to P960,000 during 2022. How much did Promenade pay for its investment in Twilight? Present solution in good accounting formarrow_forward
- Arcola, Inc., acquires all 40,000 shares of Tuscola Company for $725,000. A year later, when Arcola’s equity adjusted balance in its investment in Tuscola equals $800,000, Tuscola issues an additional 10,000 shares to outside investors for $25 per share. Which of the following best describes the effect of Tuscola’s stock issue on Arcola’s investment account?a. No effect because the shares were all sold to outside parties.b. The investment account is reduced because Arcola now owns a smaller percentage of Tuscola.c. The investment account is increased because Arcola’s share of Tuscola’s value has increased.d. No effect because Arcola maintains control over Tuscola despite the new stock issue.arrow_forwardChoose the correct. On January 1, Balanger Company buys 10 percent of the outstanding shares of its parent, Altgeld, Inc. Although the total book and fair values of Altgeld’s net assets equaled $3.2 million, the price paid for these shares was $340,000. During the year, Altgeld reported $415,000 of separate operating income (no subsidiary income was included) and declared dividends of $35,000. How are the shares of the parent owned by the subsidiary reported at December 31?a. Consolidated stockholders’ equity is reduced by $340,000.b. An investment balance of $378,000 is eliminated for consolidation purposes.c. Consolidated stockholders’ equity is reduced by $378,000.d. An investment balance of $358,000 is eliminated for consolidation purposes.arrow_forwardMonty Corporation purchased 430 common shares of Ditch Inc. for $12,900 on February 21. Monty paid a 1% commission on the share purchase and, because the shares were not publicly traded, decided to account for them following the cost model. On June 30, Ditch declared and paid a cash dividend of $2.00 per share. Prepare Monty Corporation’s journal entry to record the purchase of the investment. (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.) Date Account Titles and Explanation Debit Credit February 21 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount Prepare Monty Corporation’s journal entry to record the dividends received. (Credit account titles are automatically indented when the amount is entered.…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
