Trading Investments: Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets. To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

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Answer 1

Question

Chapter 10, Problem 10.3SE

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

2.

To determine

The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

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Accounting for equity investments On January 1, 2018, Bark Company invests $10,000 in Roots, Inc. stock. Roots pay Bark a $400 dividend on August 1, 2018. Bark sells the Roots’s stock on August 31, 2018, for $10,450. Assume the investment is categorized as a short-term equity investment and Bark Company does not have significant influence over Roots, Inc. Requirements Journalize the transactions for Bark’s investment in Roots’s stock. What was the net effect of the investment on Bark’s net income for the year ended December 31, 2018?

Accounting for equity investments On January 1, 2018, Bark Company invests $10,000 in Roots, Inc. stock. Roots pays Bark a $400 dividend on August 1, 2018. Bark sells the Roots’s stock on August 31, 2018, for $10,450. Assume the investment is categorized as a short-term equity investment and Bark Company does not have significant influence over Roots, Inc. Requirements Journalize the transactions for Bark’s investment in Roots’s stock. What was the net effect of the investment on Bark’s net income for the year ended December 31, 2018?

Pine Company makes an investment in Holt Company. Journalize the following transactions assuming that Pine Company uses (a) the fair value method and (b) the equity method for its investment in Holt Company: 1) On Jan. 1, 2017, Pine bought 30% of Holt’s common stock. Total book value of all Holt’s common stock was $800,000 on this date. 2) During 2017, Holt reported $40,000 of net income. 3) During 2017, Holt paid $20,000 of dividends

Answer 2

Question

Chapter 10, Problem 10.3SE

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

2.

To determine

The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

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Answer 3

Question

Chapter 10, Problem 10.3SE

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

2.

To determine

The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

Expert Solution & Answer

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Answer 4

Question

Chapter 10, Problem 10.3SE

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

2.

To determine

The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

Expert Solution & Answer

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Answer 5

Chapter 10, Problem 10.3SE

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

2.

To determine

The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

Answer 6

Chapter 10, Problem 10.3SE

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

Answer 7

Chapter 10, Problem 10.3SE

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

To Journalize: The transactions for Company M’s investment in Incorporation S’s stock.

Answer 8

2.

To determine

The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

Answer 9

2.

To determine

The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 10 - Prob. 1QC Ch. 10 - Which of the following investments is most likely...Ch. 10 - If Intervale Railway invests 100,000 in 5% bonds...Ch. 10 - Prob. 4QC Ch. 10 - Prob. 5QC Ch. 10 - Prob. 6QC Ch. 10 - Prob. 7QC Ch. 10 - Harvard Co. purchased a trading investment on...Ch. 10 - Prob. 9QC Ch. 10 - Prob. 10QC

Solution Summary: The author explains that trading investments are investments in debt or equity securities where the investor holds less than 20% of the voting stock.

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The net effect of the investment on Company M’s net income for the year ended December 31, 2016.

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