Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 5.9MC
To determine
To identify: The correct option.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
How much is the unrealized gain (loss) accumulated in equity as of December 31,
20x2?
Karen Co. purchased the following equity securities on January 1, 20x1 for a total amount of
P360,000.
Cost
Alaska Co. preference shares
P200,000
160,000
Valdez Co. ordinary shares
Totals
P360,000
The shares did not qualify for recognition as held for trading, thus they were classified as
investment in equity securities measured at fair value through other comprehensive income.
On December 31, 20x1, the portfolio of Karen Co. comprised the following.
Fair value - 12/31/x1
Alaska Co. preference shares
P240,000
60,000
Valdez Co. ordinary shares
Total
P300,000
On December 31, 20x2, the portfolio of Karen Co. comprised the following:
Fair value - 12/31/x2
Alaska Co. preference shares
P220,000
180,000
Valdez Co. ordinary shares
Total
P400,000
On February 2, 20x3, all of the Alaska Co. preference shares were sold for P160,000 net of transaction
costs.
0
100,000
40,000
O (40,000)
How much is the unrealized gain (loss) recognized in other comprehensive
income on December 31, 20x1?
Karen Co. purchased the following equity securities on January 1, 20x1 for a total amount of
P360,000.
Cost
Alaska Co. preference shares
P200,000
160,000
Valdez Co. ordinary shares
Totals
P360,000
The shares did not qualify for recognition as held for trading, thus they were classified as
investment in equity securities measured at fair value through other comprehensive income.
On December 31, 20x1, the portfolio of Karen Co. comprised the following.
Fair value - 12/31/x1
Alaska Co. preference shares
P240,000
60,000
Valdez Co. ordinary shares
Total
P300,000
On December 31, 20x2, the portfolio of Karen Co. comprised the following:
Fair value-12/31/x2
Alaska Co. preference shares
P220,000
Valdez Co. ordinary shares
180,000
Total
P400,000
On February 2, 20x3, all of the Alaska Co. preference shares were sold for P160,000 net of transaction
costs.
60,000
100,000
O (60,000)
Kimmel Corporation reported the following amounts for assets and liabilities at the beginning and end of a recent year.
Beginning of Year
End of Year
Assets
$231,500
$348,100
Liabilities
84,550
125,900
Calculate Kimmel’s net income or net loss for the year in each of the following independent situations (if it is a net loss, write net loss with the amount or place the amount between parentheses):
Kimmel declared no dividends and its common shares remain unchanged.
A)Kimmel declared no dividends and issued additional common shares for $12,000 cash.
B)Kimmel declared dividends totalling $8,000, and its common shares remain unchanged.
C)Kimmel declared dividends totalling $11,000 and issued additional common shares for $15,000.
Chapter 5 Solutions
Intermediate Accounting
Ch. 5 - What are the three limitations of the income...Ch. 5 - In what way is the income statement useful for...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - What management behavior does the term earnings...Ch. 5 - What is the difference between permanent and...Ch. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - What are the six key items to be reported on the...Ch. 5 - Explain why operating income is an important...Ch. 5 - Prob. 5.13QCh. 5 - Prob. 5.14QCh. 5 - What items are included in net income?Ch. 5 - Are items of other comprehensive income included...Ch. 5 - What two choices must companies make when...Ch. 5 - Prob. 5.18QCh. 5 - Prob. 5.19QCh. 5 - Are companies reporting under U.S. GAAP required...Ch. 5 - What accounts are summarized on the statement of...Ch. 5 - What is financial statement analysis?Ch. 5 - Prob. 5.23QCh. 5 - What are comparative financial statements and why...Ch. 5 - What is the difference between vertical and...Ch. 5 - Prob. 5.26QCh. 5 - Explain the difference between return on equity...Ch. 5 - How is a companys profit margin calculated?Ch. 5 - Prob. 5.1MCCh. 5 - Moore Furniture Inc., a public company, has...Ch. 5 - Beach and Poole, CPA is reviewing income statement...Ch. 5 - Prob. 5.4MCCh. 5 - Allison Corporations current year income from...Ch. 5 - Prob. 5.6MCCh. 5 - Chili Co. had the following balances at December...Ch. 5 - Szuba Corporation reported the following...Ch. 5 - Prob. 5.9MCCh. 5 - Prob. 5.1BECh. 5 - Prob. 5.2BECh. 5 - Advantages and Disadvantages of the Income...Ch. 5 - Identify each of the earnings items as primarily...Ch. 5 - Income Statement Presentation. Place the...Ch. 5 - Statement of Net Income Presentation, IFRS. Which...Ch. 5 - Single-Step Statement of Net Income. Carr...Ch. 5 - Statement of Net Income, IFRS. Using the...Ch. 5 - Multiple-Step Statement of Net Income. Using the...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Prob. 5.11BECh. 5 - Prob. 5.12BECh. 5 - Discontinued Operations. Jojo, Inc. held a...Ch. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Prob. 5.16BECh. 5 - Computation of Retained Earnings. Taxi Cabs, Inc...Ch. 5 - Computation of Contributed Capital. Using the...Ch. 5 - Prob. 5.19BECh. 5 - Prob. 5.20BECh. 5 - Prob. 5.21BECh. 5 - Ratio Analyses. Green Grasshopper Incorporated is...Ch. 5 - Multiple-Step and Single-Step Statements of Net...Ch. 5 - Condensed Statement of Net Income. Using the trial...Ch. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Multiple-step Statement of Net Income. The current...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Multiple-step income Statement. Ciara s Cookie...Ch. 5 - Prob. 5.8ECh. 5 - Prepare Statement of Stockholders' Equity. Dane...Ch. 5 - Prepare Statement of Stockholders Equity. Ciaras...Ch. 5 - Prepare a Statement of Stockholders' Equity....Ch. 5 - Profitability Analyses. Use the following excerpt...Ch. 5 - Multiple-Step and Single-Step income Statement,...Ch. 5 - Condensed Income Statement. Using the information...Ch. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Net Income Presentation. IFRS....Ch. 5 - Income Statement Presentation, Classification, and...Ch. 5 - Prob. 5.6PCh. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Comprehensive Income Single-and...Ch. 5 - Prepare Statement of Stockholders Equity. Use the...Ch. 5 - Prob. 5.10PCh. 5 - Prob. 1JCCh. 5 - Prob. 1FSCCh. 5 - Prob. 2FSCCh. 5 - Prob. 1SSCCh. 5 - Surfing the Standards Case 2: Amounts Paid by...Ch. 5 - Prob. 1BCCCh. 5 - Prob. 2BCC
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
- Assume that as of January 1, 20Y8, Sylvester Con- suiting has total assets of $500,000 and total assets of $150,000. As of December 31, 20Y8, Sylvester has total liabilities of $200,000 and total stockholders’ equity of $400,000. (a) What was Sylvester’s stockholders’ equity as of January 1, 20Y8? (b) Assume that Sylvester did not pay any dividends during 20Y8. What was the amount of net income for 20Y8?arrow_forwardArantxa Corporation made the following purchases of investments during 2023, the first year in which Arantxa invested in equity securities: 1. 2. 3. On January 15, it purchased 9,000 shares of Nirmala Corp.'s common shares at $33.50 per share plus commission of $1,980. On April 1, it purchased 5,000 shares of Oxana Corp's common shares at $52 per share plus commission of $3,370. On September 10, it purchased 7,000 shares of WTA Corp's preferred shares at $26.50 per share plus commission of $2,910. On May 20, 2023, Arantxa sold 3,000 of the Nirmala common shares at a market price of $35 per share less brokerage commissions of $2,850. The year-end fair values per share were as follows: Nirmala $30, Oxana $55, and WTA $28. The chief accountant of Arantxa tells you that Arantxa holds these investments with the intention of selling them to earn short-term profits from appreciation in their prices and accounts for them using the FV-NI model. Arantxa follows IFRS.arrow_forwardYou’ve been hired to perform an audit of Hubbard Company for the year ended December 31, 2019. You find the following account balances related to shareholders’ equity: Preferred stock, $100 par $ 33,000 Common stock, $10 par 68,000 Capital surplus (15,100) Retained earnings 172,000 Because of the antiquated terminology and negative balance, you examine the Capital Surplus account and find the following entries: Credit (Debit) Additional paid-in capital on common stock $ 27,700 Capital from donated land 16,900 Treasury stock (400 common shares at cost) (5,600) Additional paid-in capital on preferred stock 2,000 Stock dividend (50%) (20,000) Prior period adjustment (net of income taxes) (10,100) Loss from fire (uninsured), 2018 (18,100) Property dividend declared (5,600) Cash dividends declared (23,300) Balance $ (36,100) Your examination of the Preferred Stock and Common Stock accounts reveals that the amounts shown correctly state the…arrow_forward
- Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Nash's Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Swifty Company. 1. At the beginning of Year 1, Nash's bought 30% of Swifty's common stock at its book value. Total book value of all Swifty's common stock was $720,000 on this date. 2. (a) During Year 1, Swifty reported $50,000 of net income. (b) During Year 1, Swifty paid $28,000 of dividends. 3. (a) During Year 2, Swifty reported $25,000 of net income. (b) During Year 2, Swifty paid $18,000 of dividends. 4. (a) During Year 3, Swifty reported a net loss of $8,000. (b) During Year 3, Swifty paid $3,500 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.arrow_forwardnEED IN 10 MINUTES 9. On January 1, 20x1, an entity purchased marketable equity securities for P2,500,000. The entity paid commission and taxes of P190,000. The equity securities do not qualify as financial asset held for trading. The entity made irrevocable election to present unrealized gain and loss in other comprehensive income. The securities have a market value of P2,600,000, and P2,750,000 on December 31, 20x1 and December 31, 20x2. On July 1, 2022, half of the securities are sold for P1,400,000. On July 1, 2022, the net increase/ decrease in retained earnings account is (sample answer: 10,500 increase or 10,500 decrease)arrow_forwardLou Company has December 31, Year 1 balances of ÁOCI $27,000 (debit), APIC $77,000, and Retained Earnings $313,000. For Year 2, the company has net income of $17,000, an unrealized gain on available-for- sale securities of $18,000 , and the issuance of treasury stock costing $22,000 for $29,000. The ending Year 2 balances for AOCI, APIC, and Retained Earnings are, respectively $45,000, $84,000, and $330,000 $9,000, $70,000, and $330,000 $9,000, $84,000, and $330,000 $9,000, $84,000, and $296,000 а. b. С. d.arrow_forward
- You’ve been hired to perform an audit of Hubbard Company for the year ended December 31, 2019. You find the following account balances related to shareholders’ equity: Preferred stock, $100 par $ 33,000 Common stock, $10 par 68,000 Capital surplus (15,100) Retained earnings 172,000 Because of the antiquated terminology and negative balance, you examine the Capital Surplus account and find the following entries: Credit (Debit) Additional paid-in capital on common stock $ 27,700 Capital from donated land 16,900 Treasury stock (400 common shares at cost) (5,600) Additional paid-in capital on preferred stock 2,000 Stock dividend (50%) (20,000) Prior period adjustment (net of income taxes) (10,100) Loss from fire (uninsured), 2018 (18,100) Property dividend declared (5,600) Cash dividends declared (23,300) Balance $ (36,100) Your examination of the Preferred Stock and Common Stock accounts reveals that the amounts shown correctly state the…arrow_forwardAssume these are the only securities Martin owns and that the company accounts for them as trading securities. How will changes in the prices of the securities affect net income? What would the effect on net income be if the Nichols Inc. securities were worth $463,000 at year-end (instead of $558,000)arrow_forwardInstrument Corp. has the following equity investments which were held throughout 2010-2011: Fair Value Cost 12/31/10 12/31/11 FVTOCI $300,000 $400,000 $420,000 FVTPL 300,000 320,000 380,000 What amount of gain or loss would Instrument Corp. report in its income statement for the year ended December 31, 2011 related to Its Investments and what amount is reported in its statement of financial position ended December 31, 2011 for its investments? S Investment gain and Sarrow_forward
- Derr Co. purchases stock investments (with insignificant influence) at a cost of $250 on December 15. This is its first and only purchase of such securities. On December 28, Derr received a $15 cash dividend from the stock investments. At year-end December 31, the stock investments had a fair value of $200. a. Prepare the December 15 purchase entry for stock investments. b. Prepare the December 28 receipt of cash dividends entry. c. Prepare the December 31 year-end adjusting entry for the stock investments’ portfolio. d. Explain how each account in entry c is reported in financial statements. e. Prepare the January 3 entry when a portion of its stock investments (that had cost $37) is sold for $40.arrow_forwardThe following data were taken from the balance sheet accounts of Wildhorse Corporation on December 31, 2024. Current assets Debt investments (trading) Common stock (par value $10) Paid-in capital in excess of par Retained earnings a. b. C. $513,000 605,000 Prepare the required journal entries for the following unrelated items. (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. Record entries in the order displayed in the problem statement.) 501,000 Date 144,000 910,000 A 6% stock dividend is (1) declared and (2) distributed at a time when the market price per share is $40. The par value of the common stock is reduced to $2 with a 5-for-1 stock split. A dividend is declared January 5, 2025, and paid January 25, 2025, in bonds held as an investment. The bonds have a book value of $104,000 and a fair…arrow_forwardThe stockyholder's section of the balance sheet contains such as the following . Common stock . Preferred stock .Additional paid in capital . Other accumulated comprehensive income .retained earnings It is important to understand how changes in the accounts impact the balance sheet and the financial positions. Ginseng inc. Has $200, 000 of 5%, $10 par value preferred and $450,000 of $5 par value common stock issued outstanding on Dec.31, 2021. There were no stock issuance, stock splits or dividends for 2021. The organization's calender year end is Dec. 31, 2021. The preferred stock did not receive any dividends for 2019 or 2020 because the company did not have adequate cash reserves to pay out dividends. The preferred stock has a mix characteristics. . 10% of the preferred stock is noncumulative, nonparticipating . 20% of the preferred stock is cumulatuve , nonparticipating .20% of the preferred stock is nonculative, participating .50% of the preferred stock is cumulatuve,…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial instruments products; Author: fi-compass;https://www.youtube.com/watch?v=gvxozM3TUIg;License: Standard Youtube License