ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 2, Problem 2.1.1E
To determine
Concept Introduction:
The equity method is the procedure of using company’s investment assets with the associate companies, where the investor holds
The correct option for investor should report increase in investment account on receiving cash dividend if it carries the amount at fair value or equity method.
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The Equity Method of accounting for investments:
a)
Requires the investment asset to increase proportionally with the affiliates net income
b)
Requires the investment asset to decrease proportionally with the affiliates net loss
c)
Requires the investment asset to decrease proportionally with dividends received
d)
All of the above
In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for
$361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement of
financial position reported the following information at the date of acquisition:
Assets not subject to being amortized
Assets subject to depreciation (10 years average life remaining)
Liabilities
Additional information:
1.
2.
3.
4.
(a)
$180,000
546,000
101,000
Both the carrying amount and fair value are the same for non-depreciable assets and for liabilities.
The fair value of the assets subject to depreciation is $660,000.
The company depreciates its capital assets on a straight-line basis.
Washi reported net income of $143,000 and declared and paid dividends of $99,000 in 2023.
Prepare the journal entry to record Flounder's investment in Washi. Assume that any unexplained payment is goodwill. (Credit
account titles are…
options for a:
Available-for-sale Investments, at cost
cash
Retained Earnings
Unrealized gain(loss) on available-for-sale Investments
Valuation Allowance for available-for-sale Investments
options for b
first slot is yes or no
Second slot is as other revenue/expense or in the stockholder equity section
Chapter 2 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2QCh. 2 - Describe an investor’s treatment of an investment...Ch. 2 - How is the receipt of a dividend recorded under...Ch. 2 - How does carrying securities at fair value...Ch. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.12QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16AQCh. 2 - When is equity method reporting considered...Ch. 2 - How does the fully adjusted equity method differ...Ch. 2 - What is the modified equity method? When might a...Ch. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.4ECh. 2 - Acquisition Price Phillips Company bought 40...Ch. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Carrying an investment at Fair Value versus Equity...Ch. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.16AECh. 2 - Prob. 2.17AECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Investments Carried at Fair Value and Equity...Ch. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.23PCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25APCh. 2 - Equity-Method income Statement Wealthy...Ch. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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