ADVANCED ACCOUNTING W/ACCESS >CUSTOM<
14th Edition
ISBN: 9781307594683
Author: Hoyle
Publisher: MCG/CREATE
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Chapter 4, Problem 8Q
To determine
Determine the purpose of the given adjustment.
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Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the current year, a portion of this stock is sold to an outside party. Before recording this transaction, Duke adjusts the book value of its investment account. What is the purpose of this adjustment? How would Duke account for the remainder of its investment subsequent to the sale of this partial interest?
Blue Spruce Corporation purchased 300 common shares of Burke Inc. for $22,830 and accounted for them using FV-OCI. During the
year, Burke paid a cash dividend of $3.45 per share. At year end, Burke shares had a fair value of $72.50 per share.
(a)
Prepare Blue Spruce's journal entry to record the purchase of the investment. (Credit account titles are automatically indented when
the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.
List debit entry before credit entry.)
Account Titles and Explanation
Debit
Credit
On January 1, 2020, Ayayai Corporation purchased 20% of the common shares of Pina Company for $191,000. During the year, Pina
earned net income of $71,000 and paid dividends of $17,750.
Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina Company in 2020.
(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for
the account titles and enter O for the amounts.)
Account Titles and Explanation
Debit
Credit
(To record purchase of stock.)
(To record receipt of dividends.)
(To record revenue.)
Chapter 4 Solutions
ADVANCED ACCOUNTING W/ACCESS >CUSTOM<
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- On January 1, 2020, Pharoah Corporation purchased 40% of the common shares of Novak Company for $201,000. During the year, Novak earned net income of $77,000 and paid dividends of $19,250.Prepare the entries for Pharoah to record the purchase and any additional entries related to this investment in Novak Company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.)arrow_forwardAn investor company purchased 60,000 of the 500,000 outstanding shares of the investee company's common stock on January 1, 2021. During 2021, the investee company reported earnings for the year of $459,000, and declared and paid an $0.52 per share cash dividend during 2021. If the investor company uses the fair value method of accounting for its investment in the investee company, it should report Dividend Revenue from the investee for 2021 in the amount of $_______. (If there is no Dividend Revenue, then enter 0. Do not round your answer for any part of the computation.)arrow_forwardGera Corporation owns two financial investments in the shares of listed companies. Details of which are as follows: Investment 1 – Acquired on September 1, 2020, at a cost of P50,000 with a Fair value of P60,000 at year-end for the purpose of trading. Investment 2 - Acquired on August 1, 2020, at a cost of P25,000 to hold indefinitely. Its fair value at year-endis P20,000. What are the amounts to appear in the statement of Profit and Loss for the year ended September 30, 2020?arrow_forward
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- On January 1, 2025, Ayayai Corporation purchased 40% of the common shares of Pina Company for $178,000. During the year, Pina earned net income of $86,000 and paid dividends of $21,500. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.) Debit Credit IONarrow_forwardOn January 1, 2020, Waterway Corporation purchased 40% of the common shares of Wildhorse Company for $192,000. During the year, Wildhorse earned net income of $81,000 and paid dividends of $20,250.Prepare the entries for Waterway to record the purchase and any additional entries related to this investment in Wildhorse Company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.)arrow_forwardSky Ltd (Sky) has purchased an investment of 15,000 shares on 1 August 2019 at a cost of $6.5 each. Transaction costs on the purchase amounted to $1,500. As at the year ended 30 September 2019, these shares are now worth $7.75 each. Sky makes an irrevocable election at initial recognition to measure these shares at fair value through other comprehensive income to reduce accounting mismatch. Required: What is the effect on the statement of profit or loss and other comprehensive income of these shares for the year ended 30 September 2019 of Sky in accordance with HKFRS 9 ‘Financial Instruments’? A. $17,250 gain in other comprehensive income B. $18,750 gain in other comprehensive income and $1,500 expense C. $17,250 gain in profit or loss and $1,500 expense D. $18,750 loss in other comprehensive income and $1,500 expensearrow_forward
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