Homework Answers
12. Answer: a. $7,000 gain.
Working:
| Cost | Fair Value 12/31/19 | Unrealized gain (loss) | |
| Equity investment | 350000 | 365000 | 15000 |
| Balance required in fair value adjustment (debit) | 15000 | ||
| Existing balance in fair value adjustment (debit) | 8000 | ||
| Adjusting entry (debit) ($15000 - $8000) | 7000 | ||
13. Answer: b.
| Fair Value Adjustment | 23000 | |||
| Unrealized Holding Gain or Loss-Income | 23000 | |||
Working:
| Balance required in fair value adjustment (debit) | 15000 | ||
| Existing balance in fair value adjustment (credit) | 8000 | ||
| Adjusting entry (debit) ($15000 + $8000) | 23000 | ||
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Situation 1: Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2018 for...
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II. Problem Set 1 with Options (Total 39 pts.; 3 pts each) Goebel Company purchased outstanding shares of Dobbs Company's common stock. Under the following two independent scenarios (Situation 1 and 2), use the following information for questions 8-20. Situation 1: Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2018 for $350,000. During 2019 Dobbs Company had net income of $150,000 and paid a cash dividend of $60,000. (Dobbs Company paid $60,000 cash dividend to all...
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Situation 2: Goebel Company acquired a 30% interest in Dobbs Company on December 31, 2018 for...
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