INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
9th Edition
ISBN: 9781260180657
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 20, Problem 20.4E
Change in principle; change to the equity method
• LO20–2
The Crump Companies, Inc., has ownership interests in several public companies. At the beginning of 2018, the company’s ownership interest in the common stock of Silken Properties increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $31 million at the time of the change. Accountants working with company records determined that the balance would have been $48 million if the account had been adjusted to reflect the equity method.
Required:
1. Prepare the
2. Briefly describe other steps Crump should take to report the change.
3. Suppose Crump is changing from the equity method rather than to the equity method. How would your answers to requirements 1 and 2 differ?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
25 – 26:Judicious Company acquired an equity investment a number of years ago for P 3,000,000 and classified it as fair value through other comprehensive income.
On December 31, 2020, the cumulative loss recognized in other comprehensive income was P 400,000 and the carrying amount of the investment was P 2,600,000.
On December 31, 2021, the issuer of the equity instrument was in sever financial difficulty and the fair value of the equity investment had fallen to P 1,200,000.
25: What cumulative amount of unrealized loss should be reported as component of other comprehensive income in the statement of changes in equity for the year ended December 31, 2021?
26: prepare journal entry to recognize the decrease in value on December 31, 2021.
.
Exercise 12-20 (Algo) Equity method; purchase; Investee Income; dividends [LO12-6]
As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 25% of Nursery Supplies
Incorporated's 10 million shares for $65 million. The fair value and book value of the shares were the same at that time. During the
year, Nursery Supplies earned net income of $24 million and distributed cash dividends of $0.80 per share. At the end of the year, the
fair value of the shares is $61 million.
Required:
Prepare the appropriate journal entries from the purchase through the end of the year.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers
in millions, (i.e., 10,000,000 should be entered as 10).
View transaction list
Journal entry worksheet
<
1
2
3
4
Record the investment in Nursery Supplies shares.
13, pls answer part e thanks.
Chapter 20 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Ch. 20 - Prob. 20.1QCh. 20 - There are three basic accounting approaches to...Ch. 20 - Prob. 20.3QCh. 20 - Lynch Corporation changes from the...Ch. 20 - Sugarbaker Designs Inc. changed from the FIFO...Ch. 20 - Most changes in accounting principles are recorded...Ch. 20 - Southeast Steel, Inc., changed from the FIFO...Ch. 20 - Prob. 20.8QCh. 20 - Its not easy sometimes to distinguish between a...Ch. 20 - For financial reporting, a reporting entity can be...
Ch. 20 - Prob. 20.11QCh. 20 - Describe the process of correcting an error when...Ch. 20 - Prob. 20.13QCh. 20 - If it is discovered that an extraordinary repair...Ch. 20 - Prob. 20.15QCh. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in inventory methods; average cost method...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in depreciation methods LO203 Irwin, Inc.,...Ch. 20 - Prob. 20.5BECh. 20 - Book royalties LO204 Three programmers at Feenix...Ch. 20 - Warranty expense LO204 In 2017, Quapau Products...Ch. 20 - Change in estimate; useful life of patent LO204...Ch. 20 - Prob. 20.9BECh. 20 - Error correction LO206 In 2018, internal auditors...Ch. 20 - Prob. 20.11BECh. 20 - Error correction LO206 In 2018, the internal...Ch. 20 - Change in principle; change in inventory methods ...Ch. 20 - Change in principle; change in inventory methods ...Ch. 20 - Change from the treasury stock method to retired...Ch. 20 - Change in principle; change to the equity method ...Ch. 20 - Prob. 20.5ECh. 20 - FASB codification research LO202 Access the FASB...Ch. 20 - Change in principle; change in inventory cost...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in depreciation methods LO203 For...Ch. 20 - Change in depreciation methods LO203 The Canliss...Ch. 20 - Book royalties LO204 Dreighton Engineering Group...Ch. 20 - Loss contingency LO204 The Commonwealth of...Ch. 20 - Warranty expense LO204 Woodmier Lawn Products...Ch. 20 - Prob. 20.15ECh. 20 - Accounting change LO204 The Peridot Company...Ch. 20 - Change in estimate; useful life and residual value...Ch. 20 - Classifying accounting changes LO201 through...Ch. 20 - Error correction; inventory error LO206 During...Ch. 20 - Error corrections; investment LO206 Required: 1....Ch. 20 - Prob. 20.21ECh. 20 - Prob. 20.22ECh. 20 - Prob. 20.23ECh. 20 - Inventory errors LO206 Indicate with the...Ch. 20 - Classifying accounting changes and errors LO201...Ch. 20 - Change in inventory costing methods; comparative...Ch. 20 - P 20-2 Change in principle; change in method of...Ch. 20 - Change in inventory costing methods; comparative...Ch. 20 - Change in inventory methods LO202 The Rockwell...Ch. 20 - Change in inventory methods LO202 Fantasy...Ch. 20 - Change in principle; change in depreciation...Ch. 20 - Depletion; change in estimate LO204 In 2018, the...Ch. 20 - Accounting changes; six situations LO201, LO203,...Ch. 20 - Prob. 20.9PCh. 20 - Inventory errors LO206 You have been hired as the...Ch. 20 - Error correction; change in depreciation method ...Ch. 20 - Accounting changes and error correction; seven...Ch. 20 - Prob. 20.13PCh. 20 - Prob. 20.14PCh. 20 - Prob. 20.15PCh. 20 - Prob. 20.16PCh. 20 - Prob. 20.17PCh. 20 - Integrating Case 201 Change to dollar-value LIFO ...Ch. 20 - Prob. 20.2BYPCh. 20 - Prob. 20.3BYPCh. 20 - Analysis Case 204 Change in inventory methods;...Ch. 20 - Prob. 20.5BYPCh. 20 - Prob. 20.6BYPCh. 20 - Analysis Case 208 Various changes LO201 through...Ch. 20 - Analysis Case 209 Various changes LO201 through...Ch. 20 - Prob. 20.10BYPCh. 20 - Prob. 20.11BYPCh. 20 - Prob. 20.12BYPCh. 20 - Prob. 1CCTC
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
- uo 9:10 docs.google.com a * Ooredoo In. IFRS requires that cost of unsuccessful defending an intangible asset be capitalized True False All dividends, except for liquidating dividends, reduce the total shareholders' equity of a corporation * True False On January 1, 2019, a corporation issued 8% bonds with a face value of €60,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for €55,360 to yield 10%. Using the effective- interest method of computing interest, whatarrow_forward5arrow_forward#9 YOO-YOO Corporation has the following investment which was held throughout 2021–2022: Fair Value Cost 12/31/21 12/31/22 Equity investment $836000 $1128000 $1060000 What amount of gain or loss would YOO-YOO Corporation report in its income statement for the year ended December 31, 2022, related to its investment, if the fair value method of accounting was used? $292000 gain. $68000 loss. $68000 gain. $224000 gain.arrow_forward
- Journal entry worksheet 1 Record the fair value adjustment assuming the fair value of the IBM common shares was $1,283,000. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general journalarrow_forwardExercise 12-22 (Algo) Equity method; adjustment for depreciation [LO12-6, 12-7] Fizer Pharmaceutical paid $85 million on January 2, 2024, for 5 million shares of Carne Cosmetics common stock. The investment represents a 20% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $3 per share on December 21, 2024, and Carne reported net income of $35 million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was $35.50 per share. • The book value of Carne's net assets was $210 million. The fair value of Carne's depreciable assets exceeded their book value by $50 million. These assets had an average remaining useful life of ten years. • The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries…arrow_forwardExercise 12-22 (Algo) Equity method; adjustment for depreciation [LO12-6, 12-7] Fizer Pharmaceutical paid $85 million on January 2, 2024, for 5 million shares of Carne Cosmetics common stock. The investment represents a 20% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $3 per share on December 21, 2024, and Carne reported net income of $35 million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was $35.50 per share. • The book value of Carne's net assets was $210 million. • The fair value of Carne's depreciable assets exceeded their book value by $50 million. These assets had an average remaining useful life of ten years. • The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries…arrow_forward
- 45arrow_forwardPlease help me to solve this problemarrow_forwardRequired Information Exercise 12-17 (Algo) Equity investments; fair value through net income [LO12-5] [The following information applies to the questions displayed below.] The accounting records of Jamaican Importers, Incorporated, at January 1, 2024, included the following: Assets: Investment in IBM common shares Less: Fair value adjustment No changes occurred during 2024 in the investment portfolio. $ 1,745, 000 (185, 000) $ 1,560,000 Exercise 12-17 (Algo) Part 3 3. Prepare appropriate adjusting entry(s) at December 31, 2024, assuming the fair value of the IBM common shares was $1,755,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction listarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial instruments products; Author: fi-compass;https://www.youtube.com/watch?v=gvxozM3TUIg;License: Standard Youtube License