Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134833156
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Textbook Question
Chapter E, Problem E.40AP
(Learning Objectives 2, 3: Analyze and report various long-term investment transactions on the
| 2018 | |
| May 12 | Purchased 18,200 shares, which make up 25% of the common stock of Nashua Corporation at total cost of $340,000. |
| Jul 9 | Received annual cash dividend of $1.23 per share on the Nashua investment. |
| Sep 16 | Purchased 1.000 shares of Columbus. Inc., common stock (less than 5% of its outstanding stock) paying $41.50 per share. |
| Oct 30 | Received cash dividend of $0.33 per share on the Columbus investment. |
| Dec 31 | Received annual report from Nashua Corporation. Net income for the year was $540,000. |
At year-end, the fair value of the Columbus stock is $30,100. The fair value of the Nashua stock is $658,000.
Requirements
- 1. For which investment is fair value used in the accounting? Why is fair value used for one investment and not the other?
- 2. Show what Oregon Exchange would report on its year-end balance sheet and income statement for these investment transactions. It is helpful to use a T-account for the Equity-method Investment account. Ignore income tax.
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Instrument Corporation has the following investment which was held throughout 2021–2022. Assume the organization has invested in stock and holds 40%.
Fair Value
Cost 12/31/21
Equity investment $900,000 $1,200,000
A. Record the initial investment.
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Chapter E Solutions
Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)
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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