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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Chapter E, Problem E.45BP
1.
To determine
To Prepare: The journal entries to record the given transactions of Corporation L.
2.
To determine
To Prepare: The T-account for equity-method investment in Company J and also determine its balance at December 31.
3.
To determine
To Provide:
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E5-22A (Learning Objective 1: Apply GAAP for short-term investments) Norton Corporation reports short-term investments on its balance sheet. Suppose a division of Norton completed the following short-term investment transactions during 2012: 2012 Purchased 900 shares of Armor, Inc., stock for $38,700. Norton plans to sell the stock at a profit in the near future. Received a cash dividend of $0.72 per share on the Armor, Inc., stock. Adjusted the investment in Armor, Inc., stock. Current market value is $50,400. Norton still plans to sell the stock in early 2013. Dec 12 21 31 2013 Jan 16 Sold the Armor, Inc., stock for $54,300. Requirement 1. Prepare T-accounts for Cash, Short-Term Investment, Dividend Revenue, Unrealized Gain (Loss) on Investment, and Gain on Sale of Investment. Show the effects of Norton's invest- ment transactions. Start with a cash balance of $98,000; all the other accounts start at zero.
Journalizing equity investment transactions; fair value method
Seamus Industries Inc. buys and sells investments as part of its ongoing cash management. The following
investment transactions were completed during the year:
Feb. 24. Purchased 1,000 shares of Tett Co.'s common stock for $85 per share.
May 16. Purchased 2,500 shares of Isaacson Co.'s common stock for $35.
July 14. Sold 400 shares of Tett Co. stock for $102 per share.
Aug. 12. Sold 750 shares of Isaacson Co. stock for $32 per share.
Oct. 31. Received dividends of $0.40 per share on Tett Co. stock.
Dec. 31. At the end of the accounting period, the fair value of the remaining 600 shares of Tett Co.'s stock
was $110 per share. The fair value of the remaining 1,750 shares of Isaacson Co.'s stock was $30
per share.
Journalize the entries for these transactions. If an amount box does not require an entry, leave it blank.
Feb. 24
May 16
July 14
Aug. 12
Oct. 31
Dec. 31
MILESTONE II: Equity Investments, Equity Method, Fair Value Option, Net Assets
Not Equal to Market Value. [Learning Objectives 4, 6]
Jacob Corporation paid $536,200 for a 30% share of Gardner Enterprises on January 1
of the current year. Gardner reported net assets at a book value of $1,414,000 on the
date of acquisition. On the date of acquisition, it was determined that Gardner's plant
assets were undervalued by $118,000. Gardner's plant assets have a 10-year
remaining life and are depreciated by the straight-line method with no residual value.
Gardner reported net income of $224,000 and declared and paid cash dividends of
$182,000 during the current year. Finally, Gardner's common shares are valued at
$1,737,667 at the end of the current year.
DELIVERABLES
a. Compute the amount of goodwill on the exchange, if any, assuming that the
equity method is used to account for the investment.
b. Prepare all journal entries indicated on the books of the Jacob Corporation under
the fair value…
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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