Morton Ltd. owns 60 percent of the voting shares of Salt Inc. and 40 percent of the voting shares of Backy Inc. In addition, Salt Inc. owns 15 percent of the shares of Backy Inc. Briefly explain how Morton Ltd. should classify and account for its investments in Salt Inc. and Backy Inc.
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Morton Ltd. owns 60 percent of the voting shares of Salt Inc. and 40 percent of the voting shares of Backy Inc. In addition, Salt Inc. owns 15 percent of the shares of Backy Inc. Briefly explain how Morton Ltd. should classify and account for its investments in Salt Inc. and Backy Inc.
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- Able Company owns 70 percent of the outstanding voting stock of Baker Company, which, in turn, holds 80 percent of Carter Company. Carter possesses 60 percent of Dexter Company’s capital stock. How much income actually accrues to the consolidated entity from each of these companies after considering the various noncontrolling interests?DeMilo, Inc., owns 100 percent of the 43,000 outstanding shares of Ricardo, Inc. DeMilo currently carries the Investment in Ricardo account at $346,400 using the equity method. Ricardo issues 7,000 new shares to the public for $11.75 per share. How does this transaction affect the Investment in Ricardo account that appears on DeMilo’s financial records?DeMilo, Inc., owns 100 percent of the 40,000 outstanding shares of Ricardo, Inc. DeMilo currently carries the Investment in Ricardo account at $490,000 using the equity method.Ricardo issues 10,000 new shares to the public for $15.75 per share. How does this transaction affect the Investment in Ricardo account that appears on DeMilo’s financial records?
- Mattoon, Inc., owns 80 percent of Effingham Company. For the current year, this combined entity reported consolidated net income of $674,750. Of this amount $625,000 was attributable to Mattoon’s controlling interest while the remaining $49,750 was attributable to the noncontrolling interest. Mattoon has 125,000 shares of common stock outstanding and Effingham has 33,000 shares outstanding. Neither company has issued preferred shares or has any convertible securities outstanding. On the face of the consolidated income statement, how much should be reported as Mattoon’s earnings per share?Eduardo, a large entity, owns 50% and 20% of Letecia Corporation’s ordinary and preference shares, respectively. Letecia’s shares outstanding at December 31, 2021 follow: Ordinary share, P5,000,000 10% non-cumulative preference share, P1,200,000 Letecia reported net income of P750,000 for the year ended December 31, 2021. What amount should Eduardo report as total revenue related to its investment in Letecia Company for the year ended December 31, 2021?Lansing Company is owned equally by Jennifer, her husband Dan, and DeWitt Corporation, which is owned 50 percent by Jennifer and her sister Jane. Each of the three shareholders holds 220 shares in the company. Under the §318 stock attribution rules, how many shares of Lansing stock is DeWitt Corporation deemed to own? Multiple Choice 220 440 550 660
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- Pepper Corporation owns 90% of the outstanding voting stock of Salt Company and Nike Corporation owns the remaining 10% of Salt’s voting stock. On the consolidated financial statements of Pepper Corporation and Subsidiary, Nike is: Select one: a. An affiliate b. A non-controlling interest c. An associate d. An equity investeeAmos and Thomas form the Show Corporation during the current year. Amos owns 40% of Show's stock, Thomas owns 20%, and Arthur owns the remaining 40%. Amos paid $50,000 for his interest, and Thomas paid $25,000. Amos and Thomas are responsible for Show's daily operations and serve as co-chief executive officers. During the current year, Show Corporation has an operating income of $60,000 and pays out $10,000 in dividends. Assume that Show Corporation is organized as an S corporation. In its second year of operations, Show has an operating loss of $40,000 and pays out $20,000 in dividends. On December 31, Amos gives a 10% interest in Show (i.e., ¼ of his interest) to his son, Buddy. At the end of the second year, Amos's adjusted basis is $---- and Buddy's adjusted basis is $f---- in the Show stock.On January 1, 2020, Sarasota Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for $1,430,000. At the time, the book value and the fair value of John’s net assets were $13,800,000.On July 1, 2021, Sarasota paid $3,220,000 for 46,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Sarasota owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)John reported the following net income and declared and paid the following dividends. Net Income Dividend per Share Year ended 12/31/20 $770,000 None Six months ended 6/30/21 460,000 None Six months ended 12/31/21 820,000 $1.55 Determine the ending balance that Sarasota Co. should report as its investment in John Corp. at the end of 2021. Investment in Elton John Corp. $Enter the investment in Elton John Corp. in dollars