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Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter E, Problem E.34Q
To determine
The item reported in the
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Students have asked these similar questions
Company A acquired 37% investment in Company B for R196 000. During the first year after acquieition Company B made net income of R400 000. Using the equity accounting
method, what will happen to Company A's investment in Company B?
Select one:
O a. It remains the same
O b. It increases by R148 000
O c Ilt decreases by R196 000
O d. It decreases by R148 000
Calculate the market to book ratio ,debt equity ratio and retained income for the year.
whats wrong with my answers kindly
Answer
1.
Market to book ratio = Market capitalisation/ Net book value = 243,000,000/1,750,000 = 138.85
Market capitalisation = MPS x No. of shares = 270 x 900,000 = 243,000,000
As the original cost of assets and depreciation is not given, we can assume that non-current assets as the net book value.
Step 2
2.
Debt/equity ratio = (Short term debt+Long term debt)/Shareholder's fund = (730,000+180,000)/(1,800,000+160,000)
Debt-equity ratio = 910,000/1,960,000 = 0.464
Short term debt is payables in the ques, long term debt is the loan amount in the ques, and
shareholders' fund = Share capital + Retained earnings
Debt equity is less than 1 which means that it is a low levered company i.e. it has a low level of debt in comparison to equity.
3.
Retained earning is given = 160,000
Walsh, Inc. began business on January 1, 2002, and at December 31, 2002, Walsh had the following investment portfolios of equity securities:
FVPL
FVOCI
Aggregate cost
₱150,000
₱225,000
Aggregate fair value
120,000
185,000
None of the declines is judged to be other than temporary. Unrealized losses at December 31,
2002, should be recorded with corresponding charges against
Profit or loss Equity Profit or loss Equity
70,000 0 30,000 40,000
40,000 30,000 0 70,000
Chapter E Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. E - Prob. 1QCCh. E - Rolling Hills Productions held investments in...Ch. E - Prob. 3QCCh. E - Crandall's investment is in less than 2% of...Ch. E - Dumois Corporation purchased 1,500 shares of...Ch. E - Prob. 6QCCh. E - Use the Dumois Corporation data in question 5....Ch. E - Prob. 8QCCh. E - Prob. 9QCCh. E - Prob. 10QC
Ch. E - Prob. E.1SCh. E - (Learning Objective 2: Account for investments in...Ch. E - Prob. E.3SCh. E - Prob. E.4SCh. E - Prob. E.5SCh. E - Prob. E.6SCh. E - Prob. E.7SCh. E - Prob. E.8SCh. E - Prob. E.9SCh. E - Prob. E.10SCh. E - (Learning Objective 5: Record a held-to-maturity...Ch. E - Prob. E.12SCh. E - (Learning Objective 5: Calculate and record...Ch. E - Prob. E.14SCh. E - Prob. E.15SCh. E - Prob. E.16SCh. E - Prob. E.17AECh. E - (Learning Objective 2: Record transactions for...Ch. E - (Learning Objective 2: Analyze and report...Ch. E - Prob. E.20AECh. E - Prob. E.21AECh. E - Prob. E.22AECh. E - Prob. E.23AECh. E - Prob. E.24BECh. E - Prob. E.25BECh. E - (Learning Objective 2: Analyze and report...Ch. E - (Learning Objective 3: Account for transactions...Ch. E - Prob. E.28BECh. E - Prob. E.29BECh. E - Prob. E.30BECh. E - Prob. E.31QCh. E - Prob. E.32QCh. E - Prob. E.33QCh. E - Prob. E.34QCh. E - Prob. E.35QCh. E - Dividends received on an equity-method investment...Ch. E - Prob. E.37QCh. E - Prob. E.38QCh. E - Prob. E.39APCh. E - (Learning Objectives 2, 3: Analyze and report...Ch. E - (Learning Objectives 2, 3: Analyze and report...Ch. E - Prob. E.42APCh. E - Prob. E.43BPCh. E - LO 2, 3 (Learning Objectives 2, 3: Analyze and...Ch. E - Prob. E.45BPCh. E - Prob. E.46BPCh. E - Prob. E.47DC
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