On January 2, 2021, Howdy Doody Corporation purchased 15% of Ranger Corporation's common stock for $80,000. During 2021, Ranger had net income of $120,000 and declared and paid a dividend of $40,000. On December 31, 2021, the fair value of the Ranger stock owned by Howdy Doody had increased to $90,000. How much should Howdy Doody show in the 2021 income statement as income from this investment? Answer: $

On January 2, 2021, Howdy Doody Corporation purchased 15% of Ranger Corporation's common stock for $80,000. During 2021, Ranger had net income of $120,000 and declared and paid a dividend of $40,000. On December 31, 2021, the fair value of the Ranger stock owned by Howdy Doody had increased to $90,000. How much should Howdy Doody show in the 2021 income statement as income from this investment? Answer: $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Compute for the reported net income of GHI Company from its own operation, if the net income of ABC from its own operation for 2024 amounted to P157,500. Do not forget if there is any upstream and downstream.
In 2020, Merced, Inc. (a C-corporation) had net operating income of $20,000. During 2021, Merced also had long-term capital gains of $50,000 and long-term capital losses of $65,000. In addition, Merced, Inc. received a $70,000 dividend from Dolphin, Inc. in 2020. Merced owns 25% of the shares of Dolphin. Note: the operating income only includes revenue and expenses directly related to operations (it does not include any capital transactions or dividends). Determine Merced’s tax liability of 2020.
Use the info below to answer the following questions: On January 2, 2021, Pirate, Inc. purchased a 30% interest in Tee Corp. for $3, 000, 000 cash. During 2021, Tee's net income was S3, 500, 000 and it paid dividends of S1, 000, 000. Pirate's 2021 income from Tee was: Pirate's Equity Investment balance in Tee at December 31, 2021 will be:
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $406,000. Amortization of excess fair value associated with the 30% ownership is $13,800 per year. In 2021, Lindman earns an income of $298,000 and declares cash dividends of $74,500. Previously, in 2020, Lindman had sold inventory costing $38, 400 to Matthew for $ 48,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $45, 600 to Matthew for $60,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2021?
On January 1, 2024, Nana Company paid $100,000 for 6,300 shares of Papa Company common stock. The ownership in Papa Company is 10%. Nana Company does not have significant influence over Papa Company. Papa reported net Income of $51,000 for the year ended December 31, 2024. The fair value of the Papa stock on that date was $50 per share. What amount will be reported in the balance sheet of Nana Company for the Investment in Papa at December 31, 2024? Multiple Choice O O $270,000 $315,000 $255,000 $240,000
Milk Tea Company bought 1,000 shares of Macha Corporation as equity investments on January 10, 2022 for P237,300, which include P2,300 as brokerage fee. The investments are classified as equity investments at fair value through profit or loss. On December 28, 2021, a P25 peso dividend per share of Macha Corporation had been declared to be paid on March 31, 2022. There were no other transactions in 2022 affecting the investment. At what amount should Milk Tea Company record the investment in equity securities at January 10, 2022? P235,000 P212,300 P237,300 P210,000
On May 1, 2020, Clarke Inc. acquired 1,250 shares of Mayson Ltd. for $75,000. This investment represents a 16% interest in Mayson Ltd. and Clark Inc. has significant influence. On December 31, 2020, Mayon Ltd. paid a $35,000 dividend to its shareholders. At April 30, 2021 Mayson Ltd.'s shares were valued at $30 per share and Mayson Ltd. reported net income of $27,000 for the year. On June 15, 2021, Clarke Inc. sold the shares for $37,000. Both Clarke Inc. and Mayson Ltd. have April 30, 2021 year-ends. Prepare dated journal entries for the investment on the acquiring company's books and from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
During 2020, Tanso purchased 20,000 shares of Ginto common stock for P315,000 as an equity investment at FVTPL. The fair value of these shares was P300,000 on December 31, 2020. Tanso sold all of the Ginto stock for P17 per share on February 3, 2021, incurring P14,000 in brokerage commissions. Tanso should report a net realized gain/loss on the sale of stocks in 2021 amounting to
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $422,000. Amortization of excess fair value associated with the 30% ownership is $15,000 per year. In 2021, Lindman earns an income of $138,000 and declares cash dividends of $46,000. Previously, in 2020, Lindman had sold inventory costing $35,000 to Matthew for $50,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $42,900 to Matthew for $65,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. a. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2021? a. b. Equity…
Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investment at $150,650 and $165,150 at December 31, 2020, and December 31, 2021, respectively. During 2021 Clor recognized $75,250 of net income and paid dividends of $20,150. Assuming that Bloomfield owned the same percentage of Clor throughout 2021, its percentage ownership must have been: (Round your answer to the nearest whole percent): Multiple Choice 19%. 26%. 24%. 72%.
On January 1, 2020, the Stew Corporation purchased equity securities to be held for trading purposes for $2,000,000. The company also paid commissions, taxes and other transaction costs amounting to $50,000. The securities had fair values at December 31, 2020 and 2021, respectively: $1,750,000 and $2,100,000. No securities were sold during 2020. What amount of unrealized gain (loss) should be reported in the 2020 profit or loss section of the statement of comprehensive income?