Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
1st Edition
ISBN: 9780134047430
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 16, Problem 16.7E
Debt and Equity Investments, Available-for-Sale Debt and Equity with Fair Values Readily Determinable. Greenburg Company reported the following investment activity occurring at January 1 of the current year. Greenburg does not have significant influence over the investees.
Description | Amount Paid | Portfolio |
Investment in bonds ($5,600,000 par value, 7% coupon, annual interest paid on December 31, 15 years to maturity, 9% effective yield) | $4,697,203 | Held to maturity |
Investment in publicly traded common stock (100,000 shares. $33 per share acquisition price) | 3,300,000 | |
Investment in publicly traded preferred stock (75,000 shares, $10 par, $10,000 annual dividend, $18 per share acquisition price) | 450,000 |
Required
- a. Prepare the
journal entry required to record the acquisition of the investments at the beginning of the current year. - b. Prepare the journal entries to record interest and dividend income at year-end assuming that Greenburg receives the dividends on the
preferred shares. - c. Prepare the journal entries required to adjust the carrying amount of the investments to their fair values at the end of the first year: bonds. $4,595,425; common stock. $38 per share, and preferred stock, $12 per share.
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Chapter 16 Solutions
Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
Ch. 16 - Prob. 16.1QCh. 16 - Is reporting an investment at its cost considered...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Prob. 16.5QCh. 16 - Prob. 16.6QCh. 16 - What categories can managers use to classify...Ch. 16 - When is the equity method of accounting for...Ch. 16 - Prob. 16.9QCh. 16 - Can companies apply the fair value option to all...
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