Sarnia Inc. acquired 15% of the 100,000 outstanding common shares of London Ltd. on January 1, 2018, for a cash consideration of $150,000 and a further 10% of the company's common shares a year later for $110,000. On July 1, 2019, Sarnia sold half their holding in London for proceeds of $150,000. London earned an income of $150,000 in 2018 and $180,000 in 2019 (evenly over both years) and paid a regular semi-annual dividend of $60,000 in June and December each year. Sarnia does not have significant influence over London and elected when it first acquired its initial investment in London to account for this investment through other comprehensive income. The company's shares wvere trading for $11 at the end of 2018 and $12 50 at the end of 2019
Sarnia Inc. acquired 15% of the 100,000 outstanding common shares of London Ltd. on January 1, 2018, for a cash consideration of $150,000 and a further 10% of the company's common shares a year later for $110,000. On July 1, 2019, Sarnia sold half their holding in London for proceeds of $150,000. London earned an income of $150,000 in 2018 and $180,000 in 2019 (evenly over both years) and paid a regular semi-annual dividend of $60,000 in June and December each year. Sarnia does not have significant influence over London and elected when it first acquired its initial investment in London to account for this investment through other comprehensive income. The company's shares wvere trading for $11 at the end of 2018 and $12 50 at the end of 2019
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
Related questions
Question
Please include each step of calculation for my reference. Thanks a lot.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning