Assessing Financial Statement Effects Investments On January 1, Ball Corporation purchased shares of Leftwich Company common stock. (a) Assume that the stock acquired by Ball represents 15% of Leftwich's voting stock and that Ball has no influence over Leftwich's business decisions. Use the financial statement effects template to record the following transactions: (1) Ball purchased 10,000 common shares of Leftwich at $12 cash per share (2) Leftwich reported annual net income of $70,000. (3) Ball received a cash dividend of $1.20 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. Balance Sheet Transaction Cash Asset + (1) (2) (3) Noncash Contributed Earned Assets = Liabilities. Capital Capital Transaction Cash Asset + (1) Ball purchased 10,000 common shares of Leftwich at $12 cash per share. (2) Leftwich reported annual net income of $70,000. (3) Ball received a cash dividend of $1.20 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. Balance Sheet (1) (2) (3) (4) (b) Assume that the stock acquired by Ball represents 30% of Leftwich's voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. Use the financial statement effects template to record the following transactions: Noncash Assets ♦ Liabilities + Contributed Earned Capital + Capital Income Statement Not Revenue Expenses - Income Revenue Income Statement que - Expenses - Net Income
Assessing Financial Statement Effects Investments On January 1, Ball Corporation purchased shares of Leftwich Company common stock. (a) Assume that the stock acquired by Ball represents 15% of Leftwich's voting stock and that Ball has no influence over Leftwich's business decisions. Use the financial statement effects template to record the following transactions: (1) Ball purchased 10,000 common shares of Leftwich at $12 cash per share (2) Leftwich reported annual net income of $70,000. (3) Ball received a cash dividend of $1.20 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. Balance Sheet Transaction Cash Asset + (1) (2) (3) Noncash Contributed Earned Assets = Liabilities. Capital Capital Transaction Cash Asset + (1) Ball purchased 10,000 common shares of Leftwich at $12 cash per share. (2) Leftwich reported annual net income of $70,000. (3) Ball received a cash dividend of $1.20 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. Balance Sheet (1) (2) (3) (4) (b) Assume that the stock acquired by Ball represents 30% of Leftwich's voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. Use the financial statement effects template to record the following transactions: Noncash Assets ♦ Liabilities + Contributed Earned Capital + Capital Income Statement Not Revenue Expenses - Income Revenue Income Statement que - Expenses - Net Income
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 8E
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