FUNDAMENTALS OF ADVANCED ACCOUNTING >I
6th Edition
ISBN: 9781307007350
Author: Hoyle
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 1, Problem 3DYS
Access The Coca-Cola Company’s SEC 10-K filing at www.coca-cola.com and address the following:
- 1. What companies does Coca-Cola describe as significant equity method investments? How do these investments help Coca-Cola?
- 2. What criteria does Coca-Cola use in choosing to apply the equity method for these investments?
- 3. How does Coca-Cola describe its application of the equity method?
- 4. What amount of equity income did Coca-Cola report?
- 5. Coca-Cola discloses the fair values of its publicly traded bottlers accounted for as equity method investments. List the book values and fair values for these equity method investments that have publically traded data. Discuss the relevance of each of these two values.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Using the data from Years n and n-1 below, answer the following questions.
What are the company's assets, liabilities, and shareholder equity in Year n and n- I?
What story does the balance sheet tell about changes in short term investments from Year n-1 to Year n?
What story does the balance sheet tell about changes in notes payable from Year n-I to Year n?
What is the company's net income in Year n and n-I?
please provide answer and explain in detail for all answer all requirements with all working
answer in text
Accounting for equity investments in other entities depends crucially on the level of influence the investor holds on the investee. In previous weeks, you have already learned how to account for equity investments where the investors obtain control over the investees. In Week 9, you have learned the case where the investors can exert 'significant influence' over the investees. In the former case, the investor is required to consolidate the investee's financial statements, while in the latter the investor shall apply the 'equity method' to account for the investment.
Some commentators argue that having these very different treatments for similar investments is problematic as the distinction between control and significant influence is often unclear, which gives managers some flexbility to choose equity method to mask the underlying economic truth. However, many experts contend that different treatments are needed to reflect the extent to which the investee is integrated with the…
Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Nash's Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Swifty Company.
1. At the beginning of Year 1, Nash's bought 30% of Swifty's common stock at its book value. Total book value of all Swifty's common stock was $720,000 on this date.
2. (a) During Year 1, Swifty reported $50,000 of net income. (b) During Year 1, Swifty paid $28,000 of dividends.
3. (a) During Year 2, Swifty reported $25,000 of net income. (b) During Year 2, Swifty paid $18,000 of dividends.
4. (a) During Year 3, Swifty reported a net loss of $8,000. (b) During Year 3, Swifty paid $3,500 of dividends.
5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.
Chapter 1 Solutions
FUNDAMENTALS OF ADVANCED ACCOUNTING >I
Ch. 1 - A company acquires a rather large investment in...Ch. 1 - Prob. 2QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 4QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 6QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 8QCh. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 12QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Which of the following does not indicate an...Ch. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8PCh. 1 - Prob. 9PCh. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - Prob. 16PCh. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Prob. 22PCh. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - Prob. 25PCh. 1 - Prob. 26PCh. 1 - Prob. 27PCh. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - Prob. 30PCh. 1 - Prob. 31PCh. 1 - Prob. 32PCh. 1 - Prob. 33PCh. 1 - Prob. 1DYSCh. 1 - Access The Coca-Cola Companys SEC 10-K filing at...Ch. 1 - Prob. 4DYSCh. 1 - Prob. 5DYS
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.Similar questions
- Companies often invest in the common stock of other corporations. The way we report these investments depends on the nature of the investment and the investor’s motivation for the investment. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 1. Obtain the relevant authoritative literature on accounting for a change from the cost method to the equity method for investments in common stock using the FASB Accounting Standards Codification at the FASB website ( asc.fasb.org ). 2. What is the specific citation that describes how to account for a change from the cost method to the equity method for investments in common stock? 3. What are the specific requirements?arrow_forwardYou are given the financial statements of Bersatu Berhad for the 2021 and 2020. a. Use the above financial statements, determine the company’s return on equity (ROE). Is there is any significant different between the ROEs of the company for the two years? Provide the formula and show your calculation.b. Based on DuPont framework, return on equity is broken into three important components. What are the three components? Provide the formula for each component. What does each component attempts to measure?arrow_forwardGiven the financial data in the popup window, , for Disney (DIS) and McDonald's (MCD), compare these two companies using the following financial ratios: debt ratio, current ratio, total asset turnover, financial leverage component (equity miltiplier), profit margin, and return on equity. Which company would you invest in, either as a bondholder or as a stockholder? The debt ratio for Disney is nothing. (Round to four decimal places.) Help Me Solve ThisView an Example Get More Help Clear All Check Answer Data Table Click on the following Icon in order to past this table's content into a spreadsheet. Disney McDonald's Sales $48,792 $28,023 EBIT $12,116 $8,123 Net Income $7,572 $5,507 Current Assets $15,187 $5,004 Total Assets $84,112 $36,637 Current Liabilities $13,105 $3,064…arrow_forward
- The right side of the balance sheet shows the firm’s liabilities and stockholders’ equity. Which of the following best describes shareholders’ equity? Equity is the sum of what the initial stockholders paid when they bought company shares and the earnings that the company has retained over the years. Equity is the difference between the paid-in capital and retained earnings. NOW Inc. released its annual results and financial statements. Grace is reading the summary in the business pages of today’s paper. In its annual report this year, NOW Inc. reported a net income of $136 million. Last year, the company reported a retained earnings balance of $459 million, whereas this year it increased to $540 million. How much was paid out in dividends this year? $4 million $217 million $55 million $280 millionarrow_forwardplease answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image) How do I find “Return on Equity” when all I have are these numbers: profit margin 8.90% capital intensity ratio 0.50 debt equity ratio 0.65 net income 100,000.00 dividends 47,500.00arrow_forwardWhat is Adams’s January 1, 2024, Retained Earnings account balance assuming Adams accounts for its investment in Clay using the: Equity value method. Initial value method. What worksheet adjustment to Adams’s January 1, 2024, Retained Earnings account balance is required if Adams accounts for its investment in Clay using the initial value method? Prepare the worksheet entry to eliminate Clay’s stockholders’ equity. What is consolidated net income for 2024?arrow_forward
- In Chapter 2 of the textbook (pages 90-91), there is a set of financial statements for the hypothetical firm, Cheesy Chuck’s Classic Corn. Suppose you have been approached with an offer to invest in shares of the firm. Based on the accounting information provided, would you invest? Why...or why not? Please explain in detail.arrow_forwardThe image attached below shows the Capital Structure of Petronas Sdn Bhd (Oil & Gas Company) from 2018 to 2022. Answer the question : Based on the image attached, analyze the trend of the Capital Structure (debt-equity ratio) of Petronas Sdn Bhd from Year 2018 to 2022. Then, explain / comment whether the analysis of Petronas' Capital Structure is relevant / relates to the concept of MM Propositions. (you can explain it based on the MM Proposition theory or apply the formula using Petronas' Capital Structure data). (Please provide and cite reliable sources based on your research for the questions).arrow_forwardWhat amount of investment income will Pinta record during 20y4 under the equity method of accounting? A. 12,800 B. 9,200 C. 15,600 D. 3,600arrow_forward
- Stockholders' equity The right side of the balance sheet shows the firm’s liabilities and stockholders’ equity. Which of the following best describes shareholders’ equity? Equity is the initial claim on value of the assets before the firm pays off its liabilities. Equity is the difference between the company’s assets and liabilities. NOW Inc. released its annual results and financial statements. Grace is reading the summary in the business pages of today’s paper. In its annual report this year, NOW Inc. reported a net income of $148 million. Last year, the company reported a retained earnings balance of $476 million, whereas this year it increased to $560 million. How much was paid out in dividends this year? $64 million $232 million $325 million $4 million Accounting statements represent a company’s earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus,…arrow_forwardStockholders' equity The right side of the balance sheet shows the firm’s liabilities and stockholders’ equity. Which of the following best describes shareholders’ equity? Equity is the initial claim on value of the assets before the firm pays off its liabilities. Equity is the difference between the company’s assets and liabilities. NOW Inc. released its annual results and financial statements. Grace is reading the summary in the business pages of today’s paper. In its annual report this year, NOW Inc. reported a net income of $148 million. Last year, the company reported a retained earnings balance of $476 million, whereas this year it increased to $560 million. How much was paid out in dividends this year? $64 million $232 million $325 million $4 millionarrow_forwardREQUIRED Use the information provided below to prepare the Statement of Changes in Equity of Sunray Traders for the year ended 28 February 2023. INFORMATION EXTRACT FROM THE LEDGER OF SUNRAY TRADERS AS AT 28 FEBRUARY 2023 Debit Credit R R Capital: Sunny 600 000 Capital: Raymond 400 000 Current a/c: Sunny (01 March 2022) 100 000 Current a/c: Raymond (01 March 2022) 60 000 Drawings: Sunny 500 000 Drawings: Raymond 700 000 SUNRAY TRADERS STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2023 Capital Accounts Sunny Raymond Total Balance at 28 February 2022 Changes in capital Balance at 28 February 2023 Current Accounts Sunny Raymond Total Balance at 28 February 2022 Net profit for the year Drawings Balance at 28 February 2023 WORKINGS (if any) Interest on capital Sunny Raymond Salaries Sunny Raymondarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Financial instruments products; Author: fi-compass;https://www.youtube.com/watch?v=gvxozM3TUIg;License: Standard Youtube License