Ajax Beverages holds 40% of the stock of Bubbly Bottler, acquired at a cost equal to...
Ajax Beverages holds 40% of the stock of Bubbly Bottler,
acquired at a cost equal to 40% of Bubbly's book value at the time
of purchase. This is a significant influence investment. At the
start of 2021, Ajax reports the investment at a balance of
$100,000. In 2021, Bubbly reports net income of $1,000 and $50 in
other comprehensive income. Bubbly pays no dividends in 2021. The
market value of Ajax's investment in Bubbly stock increases by $500
during 2021.
At what amount does Ajax report the investment at the end of
2021?
Homework Answers
Ajax should report thr investment at market value as it is a significant influence investment and should be recorded at market value so that the stakeholders should get the true and fair view of the investment.
The value should be
1,00,000+500=$1,05,000
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Ajax Beverages holds 40% of the stock of Bubbly Bottler,
acquired at a cost equal to...
Ajax Beverages holds 40% of the stock of Bubbly Bottler, acquired at a cost equal to...
Ajax Beverages holds 40% of the stock of Bubbly Bottler, acquired at a cost equal to 40% of Bubbly's book value at the time of purchase. This is a significant influence investment. At the start of 2021, Ajax reports the investment at a balance of $100,000. In 2021, Bubbly reports net income of $1,000 and $50 in other comprehensive income. Bubbly pays no dividends in 2021. The market value of Ajax's investment in Bubbly stock increases by $500 during 2021....
7. AAA, Inc. holds 40% of the stock of BBB Corp., acquired at a cost equal...
7. AAA, Inc. holds 40% of the stock of BBB Corp., acquired at a cost equal to 40% of BBB Corp.'s book value at the time of purchase. This is a significant influence investment. At the start of 2021, AAA, Inc. reports the investment at a balance of $100,000. In 2021, BBB Corp. reports net income of $1,000 and $50 in other comprehensive income. BBB pays $750 of dividends in 2021. The market value of AAA, Inc.'s investment in the...
Consequences of Investment Reporting Choices Assume The Coca-Cola Company acquires all of the stock of Bubbly...
Consequences of Investment Reporting Choices Assume The Coca-Cola Company acquires all of the stock of Bubbly Bottler on January 1, 2019, at a cost of $950 million in cash. Bubbly's balance sheet on that date is as follows (in millions): 100 Tangible assets $1,000 Liabilities $ 900 Equity Total assets $1,000 Total liabilities and equity $1,000 Bubbly's tangible assets and liabilities are reported at amounts approximating fair value, and the excess paid over book value is attributed entirely to goodwill....
On January 3, 2015, Matteson Corporation acquired 40 percent of the outstanding common stock of O'Toole...
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Total of 7 questions. See attached photos of questions. Case I: Grant Company acquired 40% of...
Total of 7 questions. See attached photos of questions.
Case I: Grant Company acquired 40% of the voting stock of Jake Corporation on January 1, 2016, for $50,000,000. Basis differences were attributed entirely to goodwill. During the 5- year period from January 1, 2016 through December 31, 2020, Jake reported total net income of $23,000,000 and paid $8,000,000 in dividends. During 2021, Jake reported net income of $3,000,000 and paid $800,000 in dividends. Required: a. Calculate the balance in Investment...
In January 2020, Foster, Inc. acquired a 40% interest in Brady, Inc. for $250,000, giving Foster...
In January 2020, Foster, Inc. acquired a 40% interest in Brady, Inc. for $250,000, giving Foster significant influence over Brady. Any excess of purchase price over book value was considered goodwill. In 2020, Brady reported net income of $100,000 and paid total dividends amounting to $20.000. Required: Prepare Foster's 2020 journal entries related to its investment in Brady.
Equity method mechanics with other comprehensive income An investor company owns 40% of the outstanding common...
Equity method mechanics with other comprehensive income An investor company owns 40% of the outstanding common stock of an investee company, which allows the investor to exercise significant influence over the investee. The Equity Investment was reported at $650,000 as of the end of the previous year. During the year, the investor received dividends of $70,000 from the investee. The investee reports the following income statement for the year: Revenues $2,300,000 Expenses 1,800,000 Net income 500,000 Other comprehensive income 100,000...
On January 3, 2018, Matteson Corporation acquired 30 percent of the outstanding common stock of O’Toole...
On January 3, 2018, Matteson Corporation acquired 30 percent of the outstanding common stock of O’Toole Company for $1,390,000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $913,000. Any excess cost over the underlying book value was assigned to a copyright that was undervalued on its balance sheet. This copyright has a remaining useful life of 10 years. For the year ended December 31, 2018, O’Toole reported...
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7. AAA, Inc. holds 40% of the stock of BBB Corp., acquired at a cost equal to 40% of BBB Corp.'s book value at the time of purchase. This is a significant influence investment. At the start of 2021, AAA, Inc. reports the investment at a balance of $100,000. In 2021, BBB Corp. reports net income of $1,000 and $50 in other comprehensive income. BBB pays $750 of dividends in 2021. The market value of AAA, Inc.'s investment in the...
Consequences of Investment Reporting Choices Assume The Coca-Cola Company acquires all of the stock of Bubbly Bottler on January 1, 2019, at a cost of $950 million in cash. Bubbly's balance sheet on that date is as follows (in millions): 100 Tangible assets $1,000 Liabilities $ 900 Equity Total assets $1,000 Total liabilities and equity $1,000 Bubbly's tangible assets and liabilities are reported at amounts approximating fair value, and the excess paid over book value is attributed entirely to goodwill....
On January 3, 2015, Matteson Corporation acquired 40 percent of the outstanding common stock of O'Toole Company for $1,246,000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $904,000. Any excess cost over the underlying book value was assigned to a copyright that was undervalued on its balance sheet. This copyright has a remaining useful life of 10 years. For the year ended December 31, 2015, O'Toole reported...
Total of 7 questions. See attached photos of questions.
Case I: Grant Company acquired 40% of the voting stock of Jake Corporation on January 1, 2016, for $50,000,000. Basis differences were attributed entirely to goodwill. During the 5- year period from January 1, 2016 through December 31, 2020, Jake reported total net income of $23,000,000 and paid $8,000,000 in dividends. During 2021, Jake reported net income of $3,000,000 and paid $800,000 in dividends. Required: a. Calculate the balance in Investment...
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