Intermediate Accounting: Reporting and Analysis, 2017 Update
2nd Edition
ISBN: 9781337116619
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 13, Problem 6RE
To determine
Record the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On August 1, 2015, McLellan Ltd. purchased 1,000 Data-wave common shares for $45,000 cash with the intention of trading the shares and using the fair value through profit or loss model. On December 31, 2015, McLellan s year end, the shares fair value was $49,000. Prepare the journal entry to record (a) The purchase of this investment on August 1, and (b) Any adjusting journal entry required at December 31?
Please provide explanation to the recorded entries through narration.
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
On April 1, 2024, Sandhill Company purchased 46,400 common shares in Ecotown Ltd. for $13 per share. Management has designated
the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $15 per share on
December 31.
Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit
account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the
account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit
entries.)
Date
Save for Later
Account Titles
Debit
Credit
Attempts: 0 of 1 used
Submit Answer
Chapter 13 Solutions
Intermediate Accounting: Reporting and Analysis, 2017 Update
Ch. 13 - Prob. 1GICh. 13 - Provide brief definitions for the following terms:...Ch. 13 - Prob. 3GICh. 13 - Prob. 4GICh. 13 - Prob. 5GICh. 13 - Briefly summarize the accounting for an investment...Ch. 13 - Prob. 7GICh. 13 - Prob. 8GICh. 13 - Prob. 9GICh. 13 - Prob. 10GI
Ch. 13 - Prob. 11GICh. 13 - Prob. 12GICh. 13 - Prob. 13GICh. 13 - Prob. 14GICh. 13 - Briefly describe how to determine and record the...Ch. 13 - Prob. 16GICh. 13 - Prob. 17GICh. 13 - Prob. 18GICh. 13 - Prob. 19GICh. 13 - How does IFRS categorize minority passive...Ch. 13 - Prob. 21GICh. 13 - Prob. 22GICh. 13 - Prob. 23GICh. 13 - Prob. 24GICh. 13 - Prob. 25GICh. 13 - Prob. 26GICh. 13 - Prob. 27GICh. 13 - What is a fund? Distinguish between a fund and an...Ch. 13 - Prob. 29GICh. 13 - Prob. 30GICh. 13 - On January 1, 2016, Weaver Company purchased as...Ch. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Prob. 4MCCh. 13 - Prob. 5MCCh. 13 - Prob. 6MCCh. 13 - A security in a portfolio of available-for-sale...Ch. 13 - Prob. 8MCCh. 13 - Cash dividends declared out of current earnings...Ch. 13 - Prob. 10MCCh. 13 - Prob. 1RECh. 13 - Prob. 2RECh. 13 - Prob. 3RECh. 13 - Prob. 4RECh. 13 - Prob. 5RECh. 13 - Prob. 6RECh. 13 - Prob. 7RECh. 13 - Prob. 8RECh. 13 - Prob. 9RECh. 13 - Prob. 10RECh. 13 - Prob. 11RECh. 13 - Prob. 12RECh. 13 - Prob. 13RECh. 13 - On January 1, Kilgore Inc. accepts a 20,000...Ch. 13 - Prob. 15RECh. 13 - Prob. 16RECh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Prob. 5ECh. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Prob. 11ECh. 13 - Prob. 12ECh. 13 - Prob. 13ECh. 13 - Prob. 14ECh. 13 - Prob. 15ECh. 13 - Prob. 16ECh. 13 - Prob. 17ECh. 13 - Prob. 18ECh. 13 - Prob. 19ECh. 13 - Prob. 20ECh. 13 - Prob. 21ECh. 13 - Prob. 22ECh. 13 - Prob. 23ECh. 13 - Prob. 24ECh. 13 - Prob. 25ECh. 13 - Prob. 26ECh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Prob. 6PCh. 13 - Trading Securities 8th State Bank prepares interim...Ch. 13 - Available-for-Sale Securities Holly Company...Ch. 13 - Investments in Equity Securities Noonan...Ch. 13 - Available-for-Sale Investments Manson Incorporated...Ch. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 1CCh. 13 - Investments in Securities Cane Company has two...Ch. 13 - Prob. 3CCh. 13 - Prob. 4CCh. 13 - Available-for-Sale Securities The following are...Ch. 13 - Prob. 6CCh. 13 - Prob. 7CCh. 13 - Prob. 8CCh. 13 - Prob. 9CCh. 13 - Prob. 10C
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
- On April 1, 2024, Sunland Company purchased 44,800 common shares in Ecotown Ltd. for $13 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $15 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles く Debit Creditarrow_forwardOn March 31, 2018, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’snet income for the year ended December 31, 2018, was $80 million. The fair value of the shares held by Chow was$35 million at December 31, 2018. KT did not declare or pay a dividend during 2018.Required:1. Prepare all appropriate journal entries related to the investment during 2018.2. Assume that Chow sold the stock on January 20, 2019 for $30 million. Prepare the journal entry Sanbornwould use to record the sale.arrow_forwardPrepare the journal entries for an investment accounted for under the equity method. a. On January 2, 2017, Workowski Corporation purchased 55,000 shares (26%) of Wendy Company at a cost of $8 per share. b. At the end of 2017, Wendy Company reported net income of $350,000 (Workowski’s share is 26%). c. Wendy Company reported a $215,000 net loss for 2017. Workowski’s share of the loss is 26%. d. In early 2018, Wendy Company paid a $75,000 dividend. Workowski’s share is 26%.arrow_forward
- On April 1, 2024, Sheridan Company purchased 34,400 common shares in Ecotown Ltd. for $18 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $20 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries) Date 10 Account Titles Debit Creditarrow_forwardOn January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for $196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250. Prepare the entries for Vaughn to record the purchase and any additional entries related to this investment in Bramble Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)arrow_forwardIn January 2018, Janeway Inc. doubled the amount of itsoutstanding stock by selling on the market an additional10,000 shares to finance an expansion of the business. Youpropose that this information be shown by a footnote on thebalance sheet as of December 31, 2017. The president objects,claiming that this sale took place after December 31, 2017,and therefore should not be shown. Explain your position.arrow_forward
- On April 1, 2018, Gangnam Company purchased 25,000 ordinary shares of Psy Inc. at an amount that reflected book value as of that date. At the time of purchase, Psy Inc. had 100,000 ordinary shares outstanding. Gangnam had no ownership interest in Wings before the purchase. The first quarter statement ending March 31, 2018, of Psy Inc. had a profit of P480,000. For the year ended December 31, 2018, Psy Inc. reported a profit of P2,400,000. Psy Inc. paid Ganam dividends of P60,000 on June 1 and P80,000 on December 31, 2018. The carrying amount of the investment in Psy Inc. on December 31, 2018, is P4,840,000. What was Chicken Company’s acquisition cost of its investment in Wings Company on April 1, 2018?arrow_forwardOn June 30, 2015, MetroMedia, Inc., purchased 10,000 shares of Mitek stock for $20 per share.The following information pertains to the fair value of Mitek stock:Per Share12/31/2015 $2412/31/2016 31Required:Assume that management considers the stock to be available-for-sale securities. Prepare the journal entries required on each date given.arrow_forwardRefer to the preceding facts for Panther’s acquisition of Sandin common stock. On January 1, 2016, Panther held merchandise sold to it from Sandin for $12,000. This beginning inventory had an applicable gross profit of 25%. During 2016, Sandin sold merchandise to Panther for $75,000. On December 31, 2016, Panther held $18,000 of this merchandise in its inventory. This ending inventory had an applicable gross profit of 30%. Panther owed Sandin $20,000 on December 31 as a result of this intercompany sale. On January 1, 2016, Panther sold equipment with a book value of $35,000 to Sandin for $50,000. Panther also sold some fixed assets to nonaffiliates. During 2016, the equipment was used by Sandin. Depreciation is computed over a 5-year life, using the straight-line method. 1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Sandin. 2. Complete a consolidated worksheet for Panther Company and its subsidiary Sandin Company as of…arrow_forward
- Caswell Company is contemplating the purchase of LaBelle Company as of January 1, 2016. LaBelle Company has provided the following current balance sheet: (see attachment)The following information exists relative to balance sheet accounts:a. The inventory has a fair value of $200,000.b. The land is appraised at $100,000 and the building at $600,000.c. The 9% bonds payable have five years to maturity and pay annual interest each December 31. The current interest rate for similar bonds is 8% per year.d. It is likely that there will be a payment for goodwill based on projected income in excess of the industry average, which is 10% on total assets. Caswell will project the average past five years’ operating income and will pay for excess income based on an assumption of a 5-year life and a risk rate of return of 16%. The past five years’ net incomes for LaBelle are as follows:2011 $120,0002012 140,0002013 150,0002014 200,000 (includes $40,000 extraordinary gain)2015 180,0001. Provide an…arrow_forwardLexington Co. has the following securities outstanding on December 31, 2017 (its first year of operations). Cost Fair Value Greenspan Corp. stock $20,000 $19,000 Summerset Company stock 9,500 8,800 Tinkers Company stock 20,000 20,600 $49,500 $48,400 During 2018, Summerset Company stock was sold for $9,200, the difference between the $9,200 and the “fair value” of $8,800 being recorded as a “Gain on Sale of Investments.” The market price of the stock on December 31, 2018, was Greenspan Corp. stock $19,900; Tinkers Company stock $20,500.Instructions(a) What justification is there for valuing equity securities at fair value and reporting the unrealized gain or loss as part of net income?(b) How should Lexington Co. report this information in its financial statements at December 31, 2017? Explain.(c) Did Lexington Co. properly account for the sale of the Summerset Company stock? Explain.(d) Are there any additional entries necessary for Lexington Co. at December 31,…arrow_forwardRefer to the preceding facts for Panther’s acquisition of Sandin common stock. On January 1, 2016, Sandin held merchandise sold to it from Panther for $20,000. During 2016, Panther sold merchandise to Sandin for $100,000. On December 31, 2016, Sandin held $25,000 of this merchandise in its inventory. Panther has a gross profit of 30%. Sandin owed Panther $15,000 on December 31 as a result of this intercompany sale. On January 1, 2015, Sandin sold equipment to Panther at a profit of $24,000. Panther also sold some fixed assets to nonaffiliates. Depreciation is computed over a 6-year life, using the straight-line method. 1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Sandin. 2. Complete a consolidated worksheet for Panther Company and its subsidiary Sandin Company as of December 31, 2016. Prepare supporting amortization and income distribution schedules.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning