CENGAGENOWV2 FOR WARREN/REEVE/DUCHAC S
15th Edition
ISBN: 9781337272346
Author: Duchac
Publisher: IACCENGAGE
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Chapter 15, Problem 10E
(a) 1.
To determine
Journalize the stock investment transactions for Company H, under the equity method.
(a) 2.
To determine
Prepare journal entry for dividends received from Company T.
(b)
To determine
Mention the reason as to why equity method is appropriate for Company H.
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At a total cost of $6,700,000, Herrera Corporation acquired 238,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 700,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation.Required:A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles):1. Tran Corp. reports net income of $967,000 for the current period.2. A cash dividend of $0.29 per common share is paid by Tran Corp. during the current period.B. Why is the equity method appropriate for the Tran Corp. investment?
At a total cost of $5,600,000, Herrera Corporation acquired 280,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 800,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation.
Required:
A.
Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles):
1.
Tran Corp. reports net income of $600,000 for the current period.
2.
A cash dividend of $0.50 per common share is paid by Tran Corp. during the current period.
B.
Why is the equity method appropriate for the Tran Corp. investment?
At a total cost of $5,600,000, Herrera Corporation acquired 280,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 800,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation.a. Journalize the entries by Herrera Corporation to record the following information:1. Tran Corp. reports net income of $600,000 for the current period.2. A cash dividend of $0.50 per common share is paid by Tran Corp. during the current period.b. Why is the equity method appropriate for the Tran Corp. investment?
Chapter 15 Solutions
CENGAGENOWV2 FOR WARREN/REEVE/DUCHAC S
Ch. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - Prob. 4DQCh. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQ
Ch. 15 - Prob. 1PEACh. 15 - Prob. 1PEBCh. 15 - Prob. 2PEACh. 15 - Prob. 2PEBCh. 15 - Prob. 3PEACh. 15 - Prob. 3PEBCh. 15 - On January 1, Valuation Allowance for Trading...Ch. 15 - On January 1, Valuation Allowance for Trading...Ch. 15 - On January 1, Valuation Allowance for...Ch. 15 - On January 1, Valuation Allowance for...Ch. 15 - On June 30, Setzer Corporation had a market price...Ch. 15 - Prob. 6PEBCh. 15 - Prob. 1ECh. 15 - Prob. 2ECh. 15 - Bocelli Co. purchased 120,000 of 6%, 20-year Sanz...Ch. 15 - Prob. 4ECh. 15 - Prob. 5ECh. 15 - On February 22, Stewart Corporation acquired...Ch. 15 - The following equity investment transactions were...Ch. 15 - Yerbury Corp. manufactures construction equipment....Ch. 15 - Seamus Industries Inc. buys and sells investments...Ch. 15 - Prob. 10ECh. 15 - Prob. 11ECh. 15 - On January 6, Year 1, Bulldog Co. purchased 34% of...Ch. 15 - Hawkeye Companys balance sheet reported, under the...Ch. 15 - JED Capital Inc. makes investments in trading...Ch. 15 - The investments of Charger Inc. include a single...Ch. 15 - Gruden Bancorp Inc. purchased a portfolio of...Ch. 15 - Last Unguaranteed Financial Inc. purchased the...Ch. 15 - The income statement for Delta-tec Inc. for the...Ch. 15 - Highland Industries Inc. makes investments in...Ch. 15 - The investments of Steelers Inc. include a single...Ch. 15 - Prob. 21ECh. 15 - Storm, Inc. purchased the following...Ch. 15 - During Year 1, its first year of operations,...Ch. 15 - During Year 2, Copernicus Corporation held a...Ch. 15 - Prob. 25ECh. 15 - The market price for Microsoft Corporation closed...Ch. 15 - Prob. 27ECh. 15 - Prob. 28ECh. 15 - Prob. 29ECh. 15 - Soto Industries Inc. is an athletic footware...Ch. 15 - Rios Financial Co. is a regional insurance company...Ch. 15 - Forte Inc. produces and sells theater set designs...Ch. 15 - Prob. 4PACh. 15 - Rekya Mart Inc. is a general merchandise retail...Ch. 15 - Prob. 2PBCh. 15 - Glacier Products Inc. is a wholesaler of rock...Ch. 15 - Teasdale Inc. manufactures and sells commercial...Ch. 15 - Selected transactions completed by Equinox...Ch. 15 - Prob. 1CPCh. 15 - Prob. 2CPCh. 15 - Berkshire Hathaway, the investment holding company...Ch. 15 - On July 16, 20Y1, Wyatt Corp. purchased 40 acres...Ch. 15 - International Financial Reporting Standard No. 16...
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- At a total cost of $1,008,000, Herrera Corporation acquired 80,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 200,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information:arrow_forwardAt a total cost of $6,700,000, Herrera Corporation acquired 238,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 700,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: a. Journalize the entries by Herrera Corporation to record the following information on December 31: 1. Tran Corp. reports net income of $967,000 for the current period.* 2. A cash dividend of $0.29 per common share is paid by Tran Corp. during the current period.* b. Why is the equity method appropriate for the Tran Corp. investment?arrow_forwardAt a total cost of $1,251,600, Herrera Corporation acquired 84,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 300,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a.  Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. Question Content Area 1. Tran Corp. reports net income of $2,250,000 for the current period. blank  - Select - - Select -   - Select - - Select -  Question Content Area 2. A cash dividend of $1.60 per common share is paid by Tran Corp. during the current period. blank  - Select - - Select -   - Select - - Select -  Question Content Area b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount   of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is…arrow_forward
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