Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
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Chapter E, Problem 8MCQ
To determine
Find the correct option, the option which denotes the amounts to be reported by Company BO, on the
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At the beginning of the year, Corporation A purchased 8,000 shares of Corporation B's
common stock for $40 per share. B reported net income of $120,000 for the year and paid
dividends of $45,000. As of December 31, the market value of B's common stock was $42 per
share. Assuming the shares owned by Company A represent 10% of the total outstanding
stock of Company B, how much income should A report from its investment in B for the year if
the shares are considered trading securities? $4,500 $12,000 $20,500
Cosmos Corporation had the following long-term investment transactions.
Year 1
January 2
Purchased 5,000 shares of Visual, Inc. for $42 per share.
October 15
Received Visual, Inc. cash dividend of $2 per share.
December 31
Visual reported a net loss of $66,000 for the year.
Year 2
February 2
Sold 5% of the shares of Visual Inc for $7000.
Prepare the journal entries Cosmos Corporation should record for these transactions and events.
Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term
investments.
Year 1
January 5 Selk purchased 60,000 shares (20% of total) of Kildaire's common stock for $1,560,000.
October 23 Kildaire declared and paid a cash dividend of $3.20 per share.
December 31 Kildaire's net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00
per share.
Year 2
October 15 Kildaire declared and paid a cash dividend of $2.60 per share.
December 31 Kildaire's net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00
per share.
Year 3
January 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash.
Chapter E Solutions
Financial Accounting, 8th Edition
Ch. E - Prob. 1QCh. E - Explain the difference in accounting methods used...Ch. E - Explain how bonds held to maturity are reported on...Ch. E - Explain the application of the cost principle to...Ch. E - Under the fair value method, when and how does the...Ch. E - Under the equity method, why does the investor...Ch. E - Prob. 7QCh. E - Prob. 8QCh. E - Prob. 9QCh. E - Company X owns 40 percent of Company Y and...
Ch. E - Prob. 2MCQCh. E - Dividends received from stock that is reported as...Ch. E - Prob. 4MCQCh. E - Prob. 5MCQCh. E - When using the equity method of accounting, when...Ch. E - Prob. 7MCQCh. E - Prob. 8MCQCh. E - Which of the following is true regarding the...Ch. E - Prob. 10MCQCh. E - Matching Measurement and Reporting Methods Match...Ch. E - Prob. 2MECh. E - Prob. 3MECh. E - Prob. 4MECh. E - Prob. 5MECh. E - Prob. 6MECh. E - Prob. 7MECh. E - Prob. 8MECh. E - Prob. 9MECh. E - Prob. 10MECh. E - Prob. 11MECh. E - Prob. 1ECh. E - Prob. 2ECh. E - Prob. 3ECh. E - Prob. 4ECh. E - Prob. 5ECh. E - Prob. 6ECh. E - Prob. 7ECh. E - Prob. 8ECh. E - Prob. 9ECh. E - Prob. 10ECh. E - Prob. 11ECh. E - Prob. 1PCh. E - Prob. 2PCh. E - Prob. 3PCh. E - Prob. 4PCh. E - Prob. 5PCh. E - Prob. 6PCh. E - Prob. 7PCh. E - Recording Investments for Significant Influence LO...Ch. E - Prob. 9PCh. E - Prob. 10PCh. E - Prob. 11PCh. E - Prob. 1APCh. E - Prob. 2APCh. E - Prob. 3APCh. E - Prob. 4APCh. E - Prob. 5APCh. E - Prob. 6APCh. E - Prob. 1CPCh. E - Prob. 2CPCh. E - Prob. 3CPCh. E - Prob. 4CPCh. E - Prob. 5CPCh. E - Prob. 6CPCh. E - Prob. 1CC
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