(a) Explanation Equity investment: 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. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. 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. Prepare journal entry for the purchase of 480,000 shares of Company S at $30 per share. Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) January 4 Investment in Company S 14,400,000 Cash 14,400,000 (To record purchase of shares of Company S for cash) Table (1) Investment in Company S is an asset account. Since stock investments are purchased, asset value increased, and an increase in asset is debited. Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited. Working Notes: Compute amount of cash paid to purchase Company S’s stock. Cash paid = ( Number of shares purchased× Price per share ) = ( 480,000 shares ×$30 ) = $14,400,000 Prepare journal entry for dividends received from Company S. Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) July 2 Cash 300,000 Investment in Company S 300,000 (To record dividends received from Company S) Table (2) Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited (b) To determine Calculate the stock investment balance for Company F.

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Author: Carl Warren, James M. Reeve, Jonathan Duchac

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading struc…

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Chapter 15, Problem 11E

(a)

To determine

Journalize the stock investment transactions for Company F, under the equity method.

(b)

To determine

Calculate the stock investment balance for Company F.

Expert Solution & Answer

Chapter 15 Solutions

Financial Accounting

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. 4DQ Ch. 15 - Prob. 5DQ Ch. 15 - Prob. 6DQ Ch. 15 - Prob. 7DQ Ch. 15 - Prob. 8DQ Ch. 15 - Prob. 9DQ Ch. 15 - Prob. 10DQ

Ch. 15 - Prob. 1PEA Ch. 15 - Prob. 1PEB Ch. 15 - Prob. 2PEA Ch. 15 - Prob. 2PEB Ch. 15 - Prob. 3PEA Ch. 15 - Prob. 3PEB Ch. 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. 6PEB Ch. 15 - Prob. 1E Ch. 15 - Prob. 2E Ch. 15 - Bocelli Co. purchased 120,000 of 6%, 20-year Sanz...Ch. 15 - Prob. 4E Ch. 15 - Prob. 5E Ch. 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. 10E Ch. 15 - Prob. 11E Ch. 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. 21E Ch. 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. 25E Ch. 15 - The market price for Microsoft Corporation closed...Ch. 15 - Prob. 27E Ch. 15 - Prob. 28E Ch. 15 - Prob. 29E Ch. 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. 4PA Ch. 15 - Rekya Mart Inc. is a general merchandise retail...Ch. 15 - Prob. 2PB Ch. 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. 1CP Ch. 15 - Prob. 2CP Ch. 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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Silva Company is authorized to issue 5,000,000 shares of $2 par value common stock. In its IPO, the company has the following transaction: Mar. 1, issued 500,000 shares of stock at $15.75 per share for cash to investors. Journalize this transaction.
Ponce Towers, Inc., had 50,000 shares of common stock and 10,000 shares of 100 par value, 8% preferred stock outstanding on January 1, 2011. Each share of preferred stock is convertible into four shares of common stock. The stock has not been converted. During the year, Ponce Towers issued additional shares of common stock as follows: For 2011, Ponce Towers, Inc., had income from continuing operations of 545,000 and a 72,000 loss from discontinued operations (net of tax). As vice president of finance for the firm, you have been asked to calculate earnings per share for 2011. The worksheet EPS has been provided to assist you.

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