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AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

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Chapter 13, Problem 18P
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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Problem 1GI
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Problem 7GI
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Problem 11GI
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Problem 15GI
Problem 16GI
Problem 17GI
Problem 18GI
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Problem 23GI
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Problem 21E
Problem 22E
Problem 23E
Problem 24E
Problem 25E
Problem 26E
Problem 27E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 12P
Problem 13P
Problem 14P
Problem 15P
Problem 16P
Problem 17P
Problem 18P
Problem 19P
Problem 20P
Problem 21P
Problem 22P
Problem 23P
Problem 24P
Problem 25P
Problem 26P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
Problem 7C
Problem 8C
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
66 views

Application of Equity Method On January 1, 2019, Doe Company purchased 3,000 of the 10,000 common shares outstanding of Ray (Company for $15 per share and obtained significant influence. Doe amortizes its patents over 10 years. Ray’s December 31, 2018, condensed balance sheet is shown here:

Chapter 13, Problem 18P, Application of Equity Method On January 1, 2019, Doe Company purchased 3,000 of the 10,000 common , example 1

Doe was unable to determine the fair value of Ray’s identifiable net assets shown on the preceding balance sheet. It did, however, determine that Ray uses the straight-line method (no residual value) to depreciate its fixed assets and to amortize its patents over 20 years and 10 years, respectively. At the end of 2019, Ray disclosed the following condensed income statement and retained earnings statement for 2019:

Chapter 13, Problem 18P, Application of Equity Method On January 1, 2019, Doe Company purchased 3,000 of the 10,000 common , example 2

Required:

Prepare all the 2019 journal entries that Doc should make related to this investment. Show and label all supporting calculations.

To determine

Record the journal entries in the books of Company D related to the investment.

Explanation

Investment: It refers to the process of using the currently held excess cash to earn profitable returns in future. The investments can be made in equity securities such as shares or debt securities such as bonds.

Record the journal entries in the books of Company D related to the investment.

DateAccount Title and Explanation Debit Credit 
January 1, 2019Investment in Stock: Company R$45,000 
         Cash ($15×3,000) $45,000
 (To record the purchase of 30% shares of Company R)  
    
December 31, 2019Investment in Stock: Company R$9,600 
 Investment income ($32,000×0

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Ch-13 P-1GICh-13 P-2GICh-13 P-3GICh-13 P-4GICh-13 P-5GICh-13 P-6GICh-13 P-7GICh-13 P-8GICh-13 P-9GICh-13 P-10GI
Ch-13 P-11GICh-13 P-12GICh-13 P-13GICh-13 P-14GICh-13 P-15GICh-13 P-16GICh-13 P-17GICh-13 P-18GICh-13 P-19GICh-13 P-20GICh-13 P-21GICh-13 P-22GICh-13 P-23GICh-13 P-24GICh-13 P-25GICh-13 P-26GICh-13 P-27GICh-13 P-28GICh-13 P-29GICh-13 P-30GICh-13 P-31GICh-13 P-32GICh-13 P-33GICh-13 P-34GICh-13 P-1MCCh-13 P-2MCCh-13 P-3MCCh-13 P-4MCCh-13 P-5MCCh-13 P-6MCCh-13 P-7MCCh-13 P-8MCCh-13 P-9MCCh-13 P-10MCCh-13 P-1RECh-13 P-2RECh-13 P-3RECh-13 P-4RECh-13 P-5RECh-13 P-6RECh-13 P-7RECh-13 P-8RECh-13 P-9RECh-13 P-10RECh-13 P-11RECh-13 P-12RECh-13 P-13RECh-13 P-14RECh-13 P-15RECh-13 P-16RECh-13 P-1ECh-13 P-2ECh-13 P-3ECh-13 P-4ECh-13 P-5ECh-13 P-6ECh-13 P-7ECh-13 P-8ECh-13 P-9ECh-13 P-10ECh-13 P-11ECh-13 P-12ECh-13 P-13ECh-13 P-14ECh-13 P-15ECh-13 P-16ECh-13 P-17ECh-13 P-18ECh-13 P-19ECh-13 P-20ECh-13 P-21ECh-13 P-22ECh-13 P-23ECh-13 P-24ECh-13 P-25ECh-13 P-26ECh-13 P-27ECh-13 P-1PCh-13 P-2PCh-13 P-3PCh-13 P-4PCh-13 P-5PCh-13 P-6PCh-13 P-7PCh-13 P-8PCh-13 P-9PCh-13 P-10PCh-13 P-11PCh-13 P-12PCh-13 P-13PCh-13 P-14PCh-13 P-15PCh-13 P-16PCh-13 P-17PCh-13 P-18PCh-13 P-19PCh-13 P-20PCh-13 P-21PCh-13 P-22PCh-13 P-23PCh-13 P-24PCh-13 P-25PCh-13 P-26PCh-13 P-1CCh-13 P-2CCh-13 P-3CCh-13 P-4CCh-13 P-5CCh-13 P-6CCh-13 P-7CCh-13 P-8C

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