ZuoTi.Pro
Question

Dewey Corporation owns 30 percent of the common stock of Jimm Company, which it purchased at...

Dewey Corporation owns 30 percent of the common stock of Jimm Company, which it purchased at underlying book value on January 1, 20X5. Dewey reported a balance of $309,000 for its investment in Jimm Company on January 1, 20X5, and $334,800 at December 31, 20X5. During 20X5, Dewey and Jimm Company reported operating income of $359,000 and $72,000, respectively. Jimm received dividends from investments in marketable equity securities in the amount of $9,000 during 20X5. It also reported an increase of $15,000 in its portfolio of securities which were carried fair value, and a gain in the fair value of derivative contracts which were appropriately designated as cash flow hedges, hence this gain was reported in Other Comprehensive Income (OCI). Jimm paid dividends of $ $39,000 in 20X5. Ignore income taxes in determining your solution.
   
Required:
a. Assuming that Dewey uses the equity method in accounting for its investment in Jimm, compute the amount of income from Jimm recorded by Dewey in 20X5.



b. Compute the amount reported by Jimm as other comprehensive income in 20X5.

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

a. Equity-method income reported by Dewey Corporation in 2015:

Amounts reported by Jimm Co. for 2015
Operating income 72,000
Dividend income 9,000
Gain on investment in trading securities 15,000
Net income 96,000
Ownership held by Dewey *30
Investment income reported by Dewey 28,800

Calculation of Amount added to investment account in 2015

December 31, 2015 334,800
January 1, 2015 309,000
Increase in investment account in 2015 25,800
Dividends received by Dewey during 2015 6,000
Amount added to investment account in 2015 31800

b.Computation of other comprehensive income reported by Jimm Co:

Amount added to investment account in 2015 31,800
Investment income reported by Dewey in 2015 28,800
Increase due to other comprehensive income reported by Jimm Co. 3000
Proportion of ownership held by Dewey 0.30
Other comprehensive income reported by Jimm Co. 10,000
0 0
Add a comment
Know the answer?
Add Answer to:
Dewey Corporation owns 30 percent of the common stock of Jimm Company, which it purchased at...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Player Corporation purchased 100 percent of Scout Company's common stock on January 1, 20X5, and paid...

    Player Corporation purchased 100 percent of Scout Company's common stock on January 1, 20X5, and paid $37,000 above book value. The full amount of the additional payment was attributed to amortizable assets with a life of eight years remaining at January 1, 20X5. During 20X5 and 20X6, Scout reported net income of $38,000 and $7,000 and paid dividends of $16,000 and $13,000, respectively. Player uses the equity method in accounting for its investment in Scout and reported a balance in...

  • On January 1, 2020, Pharoah Company had cash and common shares of $80,000. At that date,...

    On January 1, 2020, Pharoah Company had cash and common shares of $80,000. At that date, the company had no other asset, liability, or shareholders’ equity balances. On January 2, 2020, Pharoah Company paid $60,000 cash for equity securities that it designated as fair value through other comprehensive income (FV-OCI) investments. During the year, Pharoah Company received non-taxable cash dividends of $26,000 and had an unrealized holding gain of $29,000 (net of tax) on these securities. Determine the following amounts...

  • On January 1, 2020, Concord Corporation had cash and common shares of $80,000. At that date, the company had no other asset, liability, or shareholders’ equity balances. On January 2, 2020, Concord Corporation paid $60,000 cash for equity securities that

    On January 1, 2020, Concord Corporation had cash and common shares of $80,000. At that date, the company had no other asset, liability, or shareholders’ equity balances. On January 2, 2020, Concord Corporation paid $60,000 cash for equity securities that it designated as fair value through other comprehensive income (FV-OCI) investments. During the year, Concord Corporation received non-taxable cash dividends of $26,000 and had an unrealized holding gain of $21,000 (net of tax) on these securities. Determine the following amounts...

  • Callas Corporation paid $380,000 to acquire 40 percent ownership of Thinbill Company on January 1, 20X9....

    Callas Corporation paid $380,000 to acquire 40 percent ownership of Thinbill Company on January 1, 20X9. The amount paid was equal to Thinbill’s underlying book value. During 20X9, Thinbill reported operating income of $45,000 and income of $20,000 from gains on derivative contracts that were designated as cash flow hedges, so these gains were reported in Other Comprehensive Income (OCI). Thinbill paid dividends of $9,000 on December 10, 20X9. Required: a. Give all journal entries that Callas Corporation recorded in...

  • Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at...

    Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Winston Corporation Fullbright Company Year Operating Income Dividends Net Income Dividends 20X2 $ 100,000 $ 40,000 $ 70,000...

  • Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at...

    Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Winston Corporation Fullbright Company Year Operating Income Dividends Net Income Dividends 20X2 $ 100,000 $ 40,000 $ 70,000...

  • Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at...

    Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Year 20X2 20x3 20x4 Winston Corporation Operating Income Dividends $100,000 $ 40,000 60,000 80,000 250,000 120,000 Fullbright Company...

  • On January 1, 2018, Fisher Corporation paid $2,590,000 for 30 percent of the outstanding voting stock...

    On January 1, 2018, Fisher Corporation paid $2,590,000 for 30 percent of the outstanding voting stock of Steel, Inc., and appropriately applies the equity method for its investment. Any excess of cost over Steel's book value was attributed to goodwill. During 2018, Steel reports $756,000 in net income and a $1,070,000 other comprehensive income loss. Steel also declares and pays $22,000 in dividends. a. What amount should Fisher report as its Investment in Steel on its December 31, 2018, balance...

  • Gant Company purchased 30 percent of the outstanding shares of Temp Company for $74,000 on January...

    Gant Company purchased 30 percent of the outstanding shares of Temp Company for $74,000 on January 1, 20X6. The following results are reported for Temp Company:    20X6 20X7 20X8 Net income $ 41,000 $ 36,000 $ 53,000 Dividends paid 10,000 26,000 15,000 Fair value of shares held by Gant: January 1 74,000 93,000 90,000 December 31 93,000 90,000 101,000    Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the...

  • Pie Corporation acquired 70 percent of Slice Company’s common stock on December 31, 20X5, at underlying...

    Pie Corporation acquired 70 percent of Slice Company’s common stock on December 31, 20X5, at underlying book value. The book values and fair values of Slice’s assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 30 percent of the total book value of Slice. Slice provided the following trial balance data at December 31, 20X5: Debit Credit Cash $ 28,200 Accounts Receivable 65,650 Inventory 89,400 Buildings and Equipment (net) 215,000 Cost of Goods...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT