Pharoah Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,177,500 for 47,100 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $659,000 for 2021. The fair value of Kulikowski’s stock was $28 per share at December 31, 2021.     Prepare the journal entries for Pharoah Inc. for 2020 and 2021, assuming that Pharoah cannot exercise significant influence over Kulikowski.

Q: Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31,…

A: ASC 323-10 provides guidance for accounting of income and dividends received from investees in case…

Q: On December 31, 2020, GHI Corporation holds 50,000 shares of Harry Company with market value of…

A: Unrealized gain means the upsurge in the worth of an asset or security which is yet to sold for…

Q: On January 1, 2021, AB Company purchased 15,000 shares of C Inc. for P25 per share. A total of…

A: Solution: Purchase cost of shares = 15000*P25 + P15,000 = P390,000 Sale value of shares = 5000*P30 =…

Q: Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to…

A: (A)  amount of equity method income would Matthew recognize in 2021 from its ownership interest in…

Q: BuyCo, Inc., holds 21 percent of the outstanding shares of Marqueen Company and appropriately…

A: As per the equity method, the value of the investment is recognized at cost, and that value is…

Q: On January 1, 2020, Mona, Inc., acquired 90 percent of Lisa Company’s common stock as well as 70…

A: Solution 1                Combined journal entries showing adjustment and elimination for the entry…

Q: On January 1, 2021, ABC purchased 90% of the outstanding shares of JKL Company at a cost of…

A: The consolidated income is determined by combining the incomes of both parent and subsidiary’s…

Q: Marcus Company made the following transactions in the ordinary shares of Cato Company designated as…

A: Capital gain or capital loss is incurred on the sale of capital asset of an individual. Capital gain…

Q: Rome Inc. acquired 50,000 ordinary shares of Egypt Company at P120 per share. On February 14, 2020,…

A: Shareholder means the owner of the company who is holding share in its name. Right share means where…

Q: During the year 2021, David Company purchased 1,000 shares of Goliath Company ordinary shares at…

A: The calculation of holding gain that should David report in equity on December 31 is shown hereunder…

Q: On January 1, 2021, Family Company purchased 10% of San Company's 100,000 outstanding ordinary…

A: Reported Income : Consequently, the investor's part of the joint venture's revenues and losses is…

Q: Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31,…

A: Adjusting journal entry: At year-end when the company finalizes its accounts then any unrecognized…

Q: During the year 2021, David Company purchased 1,000 shares of Goliath Company ordinary shares at…

A: Value of investment on 31 dec 2022  = (1,000-400)x200 = P120,000 Value of investment on 31 dec 2021…

Q: On December 31, 2020, R papa Company, an entity with no subsidiary, purchased 10,000 ordinary shares…

A: An investment in other entity can be recorded using two methods; 1) Fair value method, and 2) Equity…

Q: BuyCo, Inc., holds 25 percent of the outstanding shares of Marqueen Company and appropriately…

A: Gross profit percentage = ( $ 75000 - $ 60000 ) / $ 75000 = 20% Ownership % = 25%

Q: During the year 2021, Pal Company purchased 1,000 shares of Pak Company ordinary shares at P150 per…

A: No. of shares held as on December 31, 2022:   No. of shares Shares purchased in the year 2021…

Q: BuyCo, Inc., holds 28 percent of the outstanding shares of Marqueen Company and appropriately…

A: a)

Q: n January 1, 2020, Marin Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for…

A: An investment is a type of asset that is produced with the goal of allowing money to grow. One, you…

Q: During the year 2021, Pal Company purchased 1,000 shares of Pak Company ordinary shares at P150 per…

A: Answer:-  Ordinary share meaning:- Ordinary shares, sometimes also called as common shares, are…

Q: During the year 2021, Pal Company purchased 1,000 shares of Pak Company ordinary shares at P150 per…

A: As per Accounting provisions, A held for trading share is purchased with the intention of short…

Q: Sarasota Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December…

A: Solution-  Journal entries for Sarasota inc for 2020 and 2021 Assuming that Sarasota can not…

Q: Kingbird Corporation acquired a 38% interest in Blue Company on January 1, 2021, for $480,000. At…

A: Balance of equity investment = Cost of purchase + Share of net income - Share of dividend

Q: During the year 2021,David Company purchased 1,000 shares of Goliath Company ordinary shares at P150…

A: The shares designated to be valued at fair value through other comprehensive income are to be…

Q: On January 1, 2021, ABC purchased 90% of the outstanding shares of JKL Company at a cost of…

A: On January 1, 2021, ABC purchased 90% of the outstanding shares of JKL Company at a cost of…

Q: BuyCo, Inc., holds 28 percent of the outstanding shares of Marqueen Company and appropriately…

A: The equity method is the one that is applied when a company has 20% to 50% of stock ownership…

Q: Pascual Corp. owned 20,000 ordinary shares of Alegrado Corp., purchased in 2018 for P1,800,000. On…

A: The questions are multiple choice questions. Required  Choose the Correct Option.

Q: Waterway Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December…

A: Cash dividend=Number of shares×Per share dividend=46,800×$0.90=$42,120

Q: Jaycie Phelps Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on…

A: A journal entry refers to the act of making/keeping records of monetary events occurring in a…

Q: During the year 2021, Pal Company purchased 1,000 shares of Pak Company ordinary shares at P150 per…

A: It is pertinent to note that securities held for trading purposes are measured at fair value through…

Q: During the year 2021, David Company purchased 1,000 shares of Goliath Company ordinary shares at…

A: The shares designated to be valued at fair value through other comprehensive income are to be…

Q: On January 1, 2021, ABC purchased 80% of the outstanding shares of DEF at a cost of P960,000. On…

A: Non-controlling interest is the minority interest where shareholders hold less than 50% of the…

Q: On January 1, 2021, Family Company purchased 10% of San Company's 100,000 outstanding ordinary…

A: Total income includes any increase in value of investment and share of dividend received.

Q: On January 1. 2021, Family Company purchased 10% of San Company's 100,000 outstanding ordinary…

A: An increase in fair value of 10% interest which is acquired on January 1, 2021 is not reported as…

Q: On June 1, 2020, Ping Corp. purchased 10,000 of Pong's 50,000 outstanding shares at a price of P6.00…

A: Here we can see that ping corporation has purchased 10,000 shares out of 50,000 shares.  Therefore…

Q: During the year 2021,David Company purchased 1,000 shares of Goliath Company ordinary shares at P150…

A:

Q: On January 1, 2021, Patter Corp. purchased 80% of the outstanding shares of Saturn Co. at a cost of…

A: Solution Working- 1- Amortization excess = 50000/4 =12500. 2-Inter company dividend =…

Q: On January 1, 2020, Sarasota Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for…

A: Share of Investment It is the practice of the corporate business to buy the shares of the another…

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Q: standing common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $…

A: Given : Purchase price was $ 1,245,600 for 51,900 shares. declared and paid an $ 0.85 per share…

Q: At the beginning of 2021, Nobela Corporation bought 15% ownership stake in Joseph Corporation for…

A: In the investment of associate, we valued the investment value at the end of each year by the equity…

Q: On January 1, 2020, Mona, Inc., acquired 80 percent of Lisa Company’s common stock as well as 60…

A: In the case of group enterprises, the consolidated balance sheet is a crucial financial statement.…

Q: Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31,…

A: Solution:  journal entries for Bramble Inc. for 2020 and 2021 are as under:

Q: BuyCo, Inc., holds 23 percent of the outstanding shares of Marqueen Company and appropriately…

A: Part 1:

Q: 1. On July 1, 2021, Rich sold half of its stock in Doane for 396,000 cash. Before income taxes, what…

A: Income from investment to be included in the income statement: Our share of income in the company in…

Q: On January 1, 2019, Long Corporation acquired 30% of the outstanding common shares of Feeley…

A: Part 1:

Q: the outstanding shares of JKL Company at a cost of P1,632,000. On that date, JKL had P1,020,000…

A: On January 1, 2021, ABC purchased 90% of the outstanding shares of JKL Company at a cost of…

Q: On December 1, 2020, Citrus purchased 200,000 shares representing 45 percent of the outstanding…

A: Citrus long term investment in Berry should be shown in Citrus December 31, 2020, statement of…

Q: r market values. Assume income was earned evenly throughout the year except for the intercompany…

A: The balance sheet is a statement prepared to ascertain the true position of assets and liabilities…

Q: Solomon Company owned 20,000 shares of Moses Company purchased in 2015 for P2,400,000. On December…

A: Property Dividends given = 20,000 / 10 = 2000 shares

Q: On December 1, 2020, Citrus purchased 200.000 shares representing 45 percent of the outstanding…

A: Solution: Citrus long term investment in Berry should be shown in Citrus December 31, 2020,…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.