FINANCIAL AND MANAGERIAL ACCOUNTING
13th Edition
ISBN: 9781337816045
Author: WARREN
Publisher: CENGAGE L
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Chapter 13, Problem 3BPE
To determine
Equity investments: Equity investments are stock instruments which claim ownership in the investee company and pay a dividend revenue to the investor company.
Equity method: Equity method is the method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The stock investment transactions for Company Y, under the equity method
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Students have asked these similar questions
Equity Method
On January 2, Yorkshire Company acquired 32% of the outstanding stock of Fain Company for $380,000. For the year ended December 31, Fain Company earned income of $99,000 and paid dividends of $30,000.
Prepare the entries for Yorkshire Company for the purchase of the stock, the share of Fain income, and the dividends received from Fain Company.
Jan. 2 - Purchase
Dec. 31 - Income
Dec. 31 - Dividends
Equity MethodOn January 2, Yorkshire Company acquired 28% of the outstanding stock of Fain Company for $290,000. For the year ended December 31, Fain Company earned income of $75,000 and paid dividends of $23,000.Prepare the entries for Yorkshire Company for the purchase of the stock, the share of Fain income, and the dividends received from Fain Company.Jan. 2 - Purchase
Dec. 31 - Income
Dec. 31 - Dividends
On September 1, 1,500 shares of M Company stock are acquired at a price of $24 per share plus a $40 brokerage commission. This was less than 20% ownership in the
stock of M Company. On September 1, when recording the journal entry for this transaction, what account would be credited and for what amount for the acquisition of the
1,500 shares of M Company stock?
Journal
DATE
DESCRIPTION
PREF
DEBIT
CREDIT
Sept. 1
(?)
(?)
Credit Investments-M Company Stock, $36,040
Credit Cash, $36,040
Credit Investments-M Company Stock, $36,000
Credit Cash, $36,000
Chapter 13 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
Ch. 13 - Prob. 1DQCh. 13 - What causes a gain or loss on the sale of a bond...Ch. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - What are the factors contributing to the trend...Ch. 13 - Prob. 10DQ
Ch. 13 - Prob. 1APECh. 13 - Bond investment transactions Journalize the...Ch. 13 - Prob. 2APECh. 13 - Stock investment transactions On September 12,...Ch. 13 - Prob. 3APECh. 13 - Prob. 3BPECh. 13 - Prob. 4APECh. 13 - Prob. 4BPECh. 13 - Prob. 5APECh. 13 - Prob. 5BPECh. 13 - Prob. 6APECh. 13 - Prob. 6BPECh. 13 - Prob. 1EXCh. 13 - Prob. 2EXCh. 13 - Prob. 3EXCh. 13 - Prob. 4EXCh. 13 - Prob. 5EXCh. 13 - Entries for investment in stock, receipt of...Ch. 13 - Prob. 7EXCh. 13 - Prob. 8EXCh. 13 - Entries for stock investments, dividends, and sale...Ch. 13 - Prob. 10EXCh. 13 - Prob. 11EXCh. 13 - Prob. 12EXCh. 13 - Prob. 13EXCh. 13 - Prob. 14EXCh. 13 - Prob. 15EXCh. 13 - Prob. 16EXCh. 13 - Fair value journal entries, trading investments...Ch. 13 - Prob. 18EXCh. 13 - Prob. 19EXCh. 13 - Prob. 20EXCh. 13 - Prob. 21EXCh. 13 - Prob. 22EXCh. 13 - Prob. 23EXCh. 13 - Prob. 24EXCh. 13 - Prob. 25EXCh. 13 - Prob. 26EXCh. 13 - Prob. 27EXCh. 13 - Prob. 28EXCh. 13 - Prob. 29EXCh. 13 - Debt investment transactions, available-for-sale...Ch. 13 - Prob. 2APRCh. 13 - Stock investment transactions, equity method and...Ch. 13 - Prob. 4APRCh. 13 - Prob. 1BPRCh. 13 - Prob. 2BPRCh. 13 - Stock investment transactions, equity method and...Ch. 13 - Prob. 4BPRCh. 13 - Selected transactions completed by Equinox...Ch. 13 - Benefits of fair value On July 16, 1998, Wyatt...Ch. 13 - Prob. 2CPCh. 13 - Prob. 3CPCh. 13 - Prob. 4CP
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