Question

Assessing Financial Statement Effects of Passive and Equity Method Investments
On January 1, Ball Corporation purchased shares of Leftwich Company common stock.

(a) Assume that the stock acquired by Ball represents 15% of Leftwich's voting stock and that Ball has no influence over Leftwich's business decisions. Use the financial statement effects template (with amounts and accounts) to record the following transactions:

(1) Ball purchased 10,000 common shares of Leftwich at $14 cash per share.
(2) Leftwich reported annual net income of $50,000.
(3) Ball received a cash dividend of $1.10 per common share from Leftwich.
(4) Year-end market price of Leftwich common stock is $19 per share.

Use negative signs with answers, when appropriate.

	Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contributed Capital	+	Earned Capital
(1)	Answer		Answer		Answer		Answer		Answer
(2)	Answer		Answer		Answer		Answer		Answer
(3)	Answer		Answer		Answer		Answer		Answer
(4)	Answer		Answer		Answer		Answer		Answer

Income Statement
Revenue	-	Expenses	=	Net Income
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer

Answer 1

Ball Corporation Balance sheet Trans. Cash Asset + Non Cash Asset = Liabilities + Contributed Capital + Earned Capital -140000 + 140000 + 11000 + + 11000 50000 + 50000 50000 Totals -129000 + 11000 + Income Statement Revenue - Expenses = Net Income Trans. 11000 50000 11000 50000