Amount $ | |||||
Equity Method | FVTPL Model | Cost Model | |||
Statement of Financial Position: | |||||
Long term Investments | 312,100 | 274,000 | 229,000 | ||
Income Statements | |||||
Other revenues & Expenses | |||||
Dividend Revenue | - | 11,400 | 11,400 | ||
Income from associates | 94,500 | - | - | ||
Unrealized gain on long term investments | - | 45,000 | - | ||
Working: | |||||
Dividend revenue | 11,400 | (38,000 x 30% ) | |||
Unrealized gain on long term investments | 45,000 | (274,000 - 229,000 ) | |||
Income from associates | 94,500 | (315,000 x 30% ) | |||
Long term Investments-Equity Method | |||||
Purchase cost | 229,000 | ||||
Add: Income from associates | 94,500 | ||||
Less: Dividend received | 11,400 | ||||
Long term Investments-Equity Method | 312,100 | ||||
Brief Exercise 12-9 Hiroole Inc., a publicly traded company, purchased 30% of Dong Ltd.'s common shares...
Question 6 Bramble Inc. acquired 20% of the outstanding common shares of Gregson Inc. on December 31, 2019. The purchase price was $1,000,000 for 50,000 shares, and is equal to 20% of Gregson's carrying amount. Gregson declared and paid a $0.85 per share cash dividend on June 15 and again on December 15, 2020. Gregson reported net income of $545,000 for 2020. The fair value of Gregson's shares was $25 per share at December 31, 2020. Bramble is a public...
P16.7A (LO 3, 4) AN Sandhu Ltd. has 400,000 common shares authorized and 120,000 shares issued on December 31, 2020. On January 2, 2021, Kang Inc., which reports under IFRS, purchased shares of Sandhu for $40 per share on the stock market from another investor. Kang intends to hold these shares as a long-term investment and initially categorizes it as FVTOCI. Analyze investment and compare fair value, equity method, and cost method. Kang's accountant prepared a trial balance as at...
As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 25% of Nursery Supplies Inc.’s 8 million shares of capital stock for $40 million. The fair value and book value of the shares were the same at that time. The company realizes that this investment typically would be accounted for under the equity method, but instead chooses to measure the investment at fair value. During the year, Nursery Supplies reported net income of $40 million...
On January 1, 2020, Redmond Company purchased 3,000 of the 15,000 outstanding shares of common stock of Decca Computer (DC) Corporation for $80,000 cash as a long-term investment (the only long-term equity invest- ment held). The assets and liabilities of DC Corporation at the date of purchase approximate fair value. During 2020, DC reported net income of $25,000 and declared and paid cash dividends of $10,000. The fair value of DC Corporation at December 31, 2020, was $25 per share....
Required information Exercise D-8 Compare the fair value method to the equity method (LO D-2, D-3) [The following information applies to the questions displayed below.) As a long-term investment, Fair Company purchased 20% of Midlin Company's 300,000 shares for $360,000 at the beginning of the reporting year of both companies. During the year, Midlin earned net income of $135,000 and distributed cash dividends of $0.25 per share. At year-end, the fair value of the shares is $375,000. Exercise D-8 Part...
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 500,000 shares for $580,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $350,000 and distributed cash dividends of 25 cents per share. At year-end, the fair value of the shares is $615,000. Required: 1. Assume no significant influence was acquired. Prepare...
Exercise 12-19 Investment securities and equity method investments compared [LO12-5, 12-6] As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 480,000 shares for $560,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $330,000 and distributed cash dividends of 25 cents per share. At year-end, the fair value of the shares...
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 470,000 shares for $550,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $320,000 and distributed cash dividends of 20 cents per share. At year-end, the fair value of the shares is $582,000. Required: 1. Assume no significant influence was acquired. Prepare...
As a long-term investment at the beginning of the fiscal year, Joey Co. purchased 30% of Legoria Supplies, Inc.’s, (a total of 8 million shares) for $56 Million. The fair value and book value of the shares were the same at that time. During the year, Legoria Supplies Inc. earned net income of $50 million and distributed cash dividends of $1.25 per share. At the end of the fiscal year, the fair value of the shares acquired by Joey Co....
As a long-term investment at the beginning of the fiscal year, Joey Co. purchased 30% of Legoria Supplies, Inc.'s, (a total of 8 million shares) for $56 Million. The fair value and book value of the shares were the same at that time. During the year, Legoria Supplies Inc. earned net income of $50 million and distributed cash dividends of $1.25 per share. At the end of the fiscal year, the fair value of the shares acquired by Joey Co....