On January 1, 2020, Jam Company reported as long-terminvestments the following unquoted equity shares:aratDale Company, 5,000 ordinary shares (1% interest)Ever Company, 10,000 ordinary shares ( 2% interest)Fox Company, 25,000 ordinary shares (10% interest)1,250,0001,600,0002,000,000T31. On May 1, 2020, Dale Company issued a 10% sharedividend.2. On November 1, 2020, Dale Company paid a cash dividendof P20 per share.3. On January 1, 2020, Jam Company paid P5,000,000 for50,000 additional ordinary shares of Fox Company whichrepresented a 20% investment in Fox Company.The fair value of all of Fox's identifiable assets net ofliabilities was equal to their carrying amount ofP20,000,000.Jam Company's initial 10% interest of 25,000 ordinaryshares of Fox Company was acquired on January 1, 2019for P2,000,000.The 10% interest was accounted for unler cost method.On January 1, 2020, this 10% existing interest had a fairvalue of P2,400,000.Fox Company reported net income of P6,000,000 for 2020,and paid dividend of P20 per share on December 31, 2020.Required:a. Compute the goodwill arising from acquisition on January1, 2020.b. Prepare journal entries for 2020.Present the investments in equity securities on December31, 2020.с.512

Associate company is a business organization which is having influence over the company more than…

1. On May 1, 2020, Dale Company issued a 10% share On January 1, 2020, Jam Company reported as long-term investmonts the following unquoted equity shares: Dale Company, 5,000 ordinary shares (1% interest) Ever Company, 10,000 ordinary shares ( 2% interest) Fox Company, 25,000 ordinary shares (10% interest) 1,250,000 1,600,000 2,000,000 dividend. 2. On November 1, 2020, Dale Company paid a cash dividend of P20 per share. 3. On January 1, 2020, Jam Company paid P5,000,000 for 50,000 additional ordinary shares of Fox Company which represented a 20% investment in Fox Company. The fair value of all of Fox's identifiable assets net o liabilities was equal to their carrying amount o P20,000,000. Jam Company's initial 10% interest of 25,000 ordinar shares of Fox Company was acquired on January 1, 201 for P2,000,000. The 10% interest was accounted for unler cost methoc On January 1, 2020, this 10% existing interest had a fa value of P2,400,000.. 4 Fox Company reported net income of P6,000,000 for 202 and paid dividend of P20 per share on December 31, 202

1. On May 1, 2020, Dale Company issued a 10% share On January 1, 2020, Jam Company reported as long-term investmonts the following unquoted equity shares: Dale Company, 5,000 ordinary shares (1% interest) Ever Company, 10,000 ordinary shares ( 2% interest) Fox Company, 25,000 ordinary shares (10% interest) 1,250,000 1,600,000 2,000,000 dividend. 2. On November 1, 2020, Dale Company paid a cash dividend of P20 per share. 3. On January 1, 2020, Jam Company paid P5,000,000 for 50,000 additional ordinary shares of Fox Company which represented a 20% investment in Fox Company. The fair value of all of Fox's identifiable assets net o liabilities was equal to their carrying amount o P20,000,000. Jam Company's initial 10% interest of 25,000 ordinar shares of Fox Company was acquired on January 1, 201 for P2,000,000. The 10% interest was accounted for unler cost methoc On January 1, 2020, this 10% existing interest had a fa value of P2,400,000.. 4 Fox Company reported net income of P6,000,000 for 202 and paid dividend of P20 per share on December 31, 202

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 5MC: Kent Corporation was organized on January 1, 2014. On that date, it issued 200,000 shares of 10 par...

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Cary Corporation has 50,000 shares of 10 par common stock authorized. The following transactions took place during 2019, the first year of the corporations existence: Sold 5,000 shares of common stock for 18 per share. Issued 5,000 shares of common stock in exchange for a patent valued at 100,000. At the end of Carys first year, total contributed capital amounted to: a. 40,000 b. 90,000 c. 100,000 d. 190,000
Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of 2019, Tama had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of 80,000 and were issued in 2016 at par. Each 1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds have been converted. During 2019, the company earned net income of 79,200 and was subject to an income tax rate of 30%. Required: Compute the 2019 diluted earnings per share.
Juniper Company is authorized to issue 5,000,000 shares of $2 par value common stock. In conjunction with its incorporation process and the IPO, the company has the following transaction: Mar. 1, issued 4,000 shares of stock in exchange for equipment worth $250,000. Journalize the transaction.
Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight line method) and dividends on each security during 2019. Each of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.
Raun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.
On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.