Soft Bound Version for Advanced Accounting 13th Edition
Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 1, Problem 10Q
To determine

Explain the way in which the loss in value affects this investor’s financial reporting.

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At the beginning of the question-and-answer portion of the annual shareholder’s meeting of Kemper Ltd., shareholder Mike Kerwin asks, “Why did management sell the holdings in UMW Company at a loss when this company has been very profitable during the period Kemper held its shares?” Since President Tony Chavez has just concluded his speech on the recent success and bright future of Kemper, he is taken aback by this question and responds, “I remember we paid £1,300,000 for those shares some years ago. I am sure we sold these shares at a much higher price. You must be mistaken.” Kervin retorts, “Well, right here in footnote number 7 to the annual report it shows that 240,000 shares, a 30% interest in UMW, were sold on the last day of the year. Also, it states that UMW earned £520,000 this year and paid out £160,000 in cash dividends. Further, a summary statement indicates that in past years, while Kemper held UMW shares, UMW earned £1,240,000 and paid out £440,000 in dividends. Finally,…
In early December of 2016, Kettle Corp purchased $50,000 of Icalc Company common stock, which constitutes less than 1% of Icalc’s outstanding shares. By December 31, 2016, the value of Icalc’s investment had fallen to $40,000, and Kettle recorded an unrealized loss. By December 31, 2017, the value of the Icalc investment had fallen to $25,000, and Kettle determined that it can no longer assert that it has both the intent and ability to hold the shares long enough for their fair value to recover, so Kettle recorded an OTT impairment. By December 31, 2018, fair value had recovered to $30,000. Required: Prepare appropriate entry(s) at December 31, 2016, 2017, and 2018, and for each year indicate how the scenario will affect net income, OCI, and comprehensive income.
Recently, Hale Corporation announced the sale of 2.5 million newly issued shares of its stock at a price of $21 per share. Hale sold the stock to an investment banker, who in turn sold it to individual and institutional investors. This is a primary market transaction.a.Trueb.False

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Soft Bound Version for Advanced Accounting 13th Edition

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