Homework Answers
Types of Accounting Models for dividend as per IFRS:
1) Cost Model: When a company holds less than 20% of stake,without exercising any control, the investment is recorded at cost and dividend received is treated as income.
2) Consolidation Model: When a company has investments of more than 50% in another company or controls the board of directors of such company, Consolidation model is applicable, wherein all profits & losses and assets & liabilities of such company (subsidiary) is consolidated with the company (Parent). Dividend is not recorded separately.
3) Equity Model : When a company has investments of more than 20% in another company and doesn't excercise full control but significant influence in another company, Equity model is applicable wherein proportionate assets& liabilities and profits & losses of such company (Associate)will be consolidated. Dividend is not recorded separately.
Accordingly, the Accounting models applicable are as follows:
1) STG Corporation - Cost Model (<20% stake and no control)
2) Brach Limited - Consolidation Model ( Control on Board of Directors)
3) Raptor Inc. - Cost Model (<20%stake and no control)
4) CMP Ltd. - Equity Model (>20% stake & no control)
5) Diloph Inc. - Cost Model (<20% stake & no control. Holding period is irrelevant)
The amount of dividend income to be shown on whispering's income statement for 2020 will be:
6950+2160+7410=$16,520.
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Following is a summary of the investments owned by Whispering Corporation, as of January 1, 2020:...
Following is a summary of the investments owned by Cheyenne Corporation, as of January 1, 2020:...
Following is a summary of the investments owned by Cheyenne Corporation, as of January 1, 2020: Percentage of Outstanding Shares Investment STG Corporation Brach Ltd. 33% Cheyenne's Intention To be sold when prices increase Buy additional shares to achieve control of company Cheyenne has members on Brach's Board of Directors. To be sold when prices increase Hold indefinitely. Another company owns the remaining 78% of shares Hold indefinitely 2% Raptor Inc. CMP Ltd. Diloph Inc. 229 During 2020, the various...
Whispering Corporation is preparing the comparative financial statements for the annual report to its shareholders for...
Whispering Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021. The income from operations for the fiscal year ended May 31, 2020, was $1,741,000 and income from continuing operations for the fiscal year ended May 31, 2021, was $2,605,000. In both years, the company incurred a 10% interest expense on $2,439,000 of debt, an obligation that requires interest-only payments for 5 years. The company...
The following information is related to Whispering Company for 2020. Retained earnings balance, January 1, 2020...
The following information is related to Whispering Company for
2020.
Retained earnings balance, January 1, 2020
$1,078,000
Sales Revenue
27,500,000
Cost of goods sold
17,600,000
Interest revenue
77,000
Selling and administrative expenses
5,170,000
Write-off of goodwill
902,000
Income taxes for 2020
1,368,400
Gain on the sale of investments
121,000
Loss due to flood damage
429,000
Loss on the disposition of the wholesale division (net of
tax)
484,000
Loss on operations of the wholesale division (net of tax)
99,000
Dividends declared...
Whispering Corporation has retained earnings of $682,100 at January 1, 2020. Net income during 2020 was...
Whispering Corporation has retained earnings of $682,100 at January 1, 2020. Net income during 2020 was $1,433,300, and cash dividends declared and paid during 2020 totaled $79,100. Prepare a retained earnings statement for the year ended December 31, 2020. (List items that increase retained earnings first.) WHISPERING CORPORATION Retained Earnings Statement For the Year Ended December 31, 2020 Retained Earnings, January 1 $ Less : Retained Earnings. December 31 $
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Whispering Corporation made the following cash purchases of securities during 2020, which is the first year...
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On January 5, 2020, Whispering Corporation received a charter granting the right to issue 5,300 shares...
On January 5, 2020, Whispering Corporation received a charter
granting the right to issue 5,300 shares of $100 par value, 8%
cumulative and nonparticipating preferred stock, and 46,700 shares
of $10 par value common stock. It then completed these
transactions.
Jan. 11
Issued 20,000 shares of common stock at $17 per share.
Feb. 1
Issued to Sanchez Corp. 4,400 shares of preferred stock for the
following assets: equipment with a fair value of $47,300; a factory
building with a fair...
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Additional Problem 9 Whispering Ltd. is a Canadian publicly-traded business with a December 31 fiscal year...
Additional Problem 9 Whispering Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Whispering purchased 240 common shares of AFS Corporation on July 1, 2017 at a price of $5 per share. On the day of acquisition, Whispering elected to account for the investment using the fair-value through other comprehensive income (FV-OCI) with recycling model. On August 1, 2017, AFS declared dividends of...
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Whispering Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021. The income from operations for the fiscal year ended May 31, 2020, was $1,741,000 and income from continuing operations for the fiscal year ended May 31, 2021, was $2,605,000. In both years, the company incurred a 10% interest expense on $2,439,000 of debt, an obligation that requires interest-only payments for 5 years. The company...
The following information is related to Whispering Company for
2020.
Retained earnings balance, January 1, 2020
$1,078,000
Sales Revenue
27,500,000
Cost of goods sold
17,600,000
Interest revenue
77,000
Selling and administrative expenses
5,170,000
Write-off of goodwill
902,000
Income taxes for 2020
1,368,400
Gain on the sale of investments
121,000
Loss due to flood damage
429,000
Loss on the disposition of the wholesale division (net of
tax)
484,000
Loss on operations of the wholesale division (net of tax)
99,000
Dividends declared...
Whispering Corporation has retained earnings of $682,100 at January 1, 2020. Net income during 2020 was $1,433,300, and cash dividends declared and paid during 2020 totaled $79,100. Prepare a retained earnings statement for the year ended December 31, 2020. (List items that increase retained earnings first.) WHISPERING CORPORATION Retained Earnings Statement For the Year Ended December 31, 2020 Retained Earnings, January 1 $ Less : Retained Earnings. December 31 $
Whispering Corporation made the following cash purchases of securities during 2020, which is the first year in which Whispering invested in securities. 1. 2. 3. On January 15, purchased 8,800 shares of Sanchez Company's common stock at $33.50 per share plus commission $1,744. On April 1, purchased 4,400 shares of Vicario Co.'s common stock at $52 per share plus commission $2,964. On September 10, purchased 6,160 shares of WTA Co.'s preferred stock at $26.50 per share plus commission $4,320. On...
On January 5, 2020, Whispering Corporation received a charter
granting the right to issue 5,300 shares of $100 par value, 8%
cumulative and nonparticipating preferred stock, and 46,700 shares
of $10 par value common stock. It then completed these
transactions.
Jan. 11
Issued 20,000 shares of common stock at $17 per share.
Feb. 1
Issued to Sanchez Corp. 4,400 shares of preferred stock for the
following assets: equipment with a fair value of $47,300; a factory
building with a fair...
Sarasota Corporation had the following portfolio of investments at December 31, 2020, that qualified and were accounted for using the FV OCI method: Quantity Frank Inc 2.200 shares Ellis Corp. 5.400 shares Mendota Ltd. 4.400 shares Percent Cost per Fair Value Interest Share per Share 8% $11 $16 14% 21 17 2% 33 26 Early in 2021, Sarasota sold all the Frank Inc. shares for $17 per share, less a 1% commission on the sale.On December 31, 2021. Sarasota's portfolio...
Additional Problem 9 Whispering Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Whispering purchased 240 common shares of AFS Corporation on July 1, 2017 at a price of $5 per share. On the day of acquisition, Whispering elected to account for the investment using the fair-value through other comprehensive income (FV-OCI) with recycling model. On August 1, 2017, AFS declared dividends of...
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