Magnus Tech owns 30% of Mirika Inc. and accounts for the investment using the equity method....
Magnus Tech owns 30% of Mirika Inc. and accounts for the
investment using the equity method. During the year, Mirika reports
a net loss of $2,500,000 and pays total dividends of
$70,000.
Which of the following describes the change in Magnus’ investment
in Mirika during the year?
A. The investment decreases by $771,000
B. The investment decreases by $2,430,000
C. The investment increases by $21,000
D. The investment decreases by $735,000
Homework Answers
Option A is correct i.e. the investment decreases by $771,000.
Reason:-
Net income of the investee company increases the investment value while net loss and dividend payout decreases the investment amount.
Magnus investment in Mirika inc. decreases by :-
= (2,500,000 + 70,000) x 30% = $771,000
Add Answer to:
Magnus Tech owns 30% of Mirika Inc. and accounts for the
investment using the equity method....
An investor owns 25% of an investee, and accounts for its investment using the equity method....
An investor owns 25% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investor's balance sheet at $1,500,000. During the year, the investee reported net income of $600,000 and paid dividends of $150,000. In addition, the investor sold inventory to the investee, realizing a gross profit of $180,000 on the sale. At the end of the year, 30% of the inventory remained unsold by...
An investor owns 25% of an investee, and accounts for its investments using the equity method....
An investor owns 25% of an investee, and accounts for its investments using the equity method. At the beginning of the year, the equity investment was reported on the investors balance sheet at $1,000,000. During the year the investee reported net income of $400,000 and paid dividends of $100,000. In addition the investor sold inventory to the investee realizing gross profit of $120,000 on the sale. At the end of the year 30% of the inventory remained unsold by the...
Question 22 (4 points) Smith, Inc. uses the Simple Equity Method to account for the net...
Question 22 (4 points) Smith, Inc. uses the Simple Equity Method to account for the net income of Redstone, Inc., a company Smith, Inc. owns 100 % of the outstanding stock of. When Redstone, Inc. reports quarterly Net Income of $80,000 on 6/30/19, Smith, Inc. will: a) Debit the Investment and Credit Investment Income $80,000 b) Debit Investment Income and Credit the Inivestment $80,000 O c) Smith, Inc. will make no journal entry resulting from this transaction d) Debit Dividends...
Equity method journal entries with intercompany sales of inventory An investor owns 25% of an investee,...
Equity method journal entries with intercompany sales of inventory An investor owns 25% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investor's balance sheet at $2,000,000. During the year, the investee reported net income of $800,000 and paid dividends of s200,000. In addition, the investor sold inventory to the investee, realizing a gross profit of $240,000 on the sale. At the end of...
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...
An investor uses the equity method to account for an investment in common stock. Assume that...
An investor uses the equity method to account for an investment in common stock. Assume that (1) the investor owns less than 50 percent of the outstanding common stock of the investee, (2) the investee company reports net income and declares dividends during the year, (3) the fair value of the investee’s stock is unchanged during the year, and (4) the investee’s net income is more than the dividends it declares. How would the investor’s investment in the common stock...
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year,...
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of unrealized gross profit must Panner defer in reporting this investment using the equity method? a. $2,400 b. $4,800. c. $8,000. d. $10,800
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year,...
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $93,100 and then sells it to Watkins for $133,000. At the end of the year, Watkins still holds only $21,400 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method? Multiple Choice o $10,026. • $1,926. O $4,926. o $12,726.
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year,...
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $110,400 and then sells it to Watkins for $138,000. At the end of the year, Watkins still holds only $25,300 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method? Multiple Choice $1,518. 0 $8,418. 0 $6,318. 0 $11,118.
Change from Fair Value Method to Equity Method ( Prospective treatment) Assume A owns 10% of...
Change from Fair Value Method to Equity Method ( Prospective treatment) Assume A owns 10% of B on January 1, 2012. On July 1, 2012 A increases ownership to 40% by purchasing additional shares in B. The following represent the earnings and dividends of B for 2012. Income Dividends January 1 - June 30 50,000 30,000 July 1 - December 31 70,000 40,000 1. How much equity income is recognized by A in 2012. 2. How much dividend income is...
Question 22 (4 points) Smith, Inc. uses the Simple Equity Method to account for the net income of Redstone, Inc., a company Smith, Inc. owns 100 % of the outstanding stock of. When Redstone, Inc. reports quarterly Net Income of $80,000 on 6/30/19, Smith, Inc. will: a) Debit the Investment and Credit Investment Income $80,000 b) Debit Investment Income and Credit the Inivestment $80,000 O c) Smith, Inc. will make no journal entry resulting from this transaction d) Debit Dividends...
Equity method journal entries with intercompany sales of inventory An investor owns 25% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investor's balance sheet at $2,000,000. During the year, the investee reported net income of $800,000 and paid dividends of s200,000. In addition, the investor sold inventory to the investee, realizing a gross profit of $240,000 on the sale. At the end of...
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of unrealized gross profit must Panner defer in reporting this investment using the equity method? a. $2,400 b. $4,800. c. $8,000. d. $10,800
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $93,100 and then sells it to Watkins for $133,000. At the end of the year, Watkins still holds only $21,400 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method? Multiple Choice o $10,026. • $1,926. O $4,926. o $12,726.
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $110,400 and then sells it to Watkins for $138,000. At the end of the year, Watkins still holds only $25,300 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method? Multiple Choice $1,518. 0 $8,418. 0 $6,318. 0 $11,118.
Most questions answered within 3 hours.
-
could you please help me to explain the nmr splitting
integration and chemical shift and assignment...
asked 2 minutes ago -
Organizations may have only a few products or many products in a
product line. Consider Campbell...
asked 6 minutes ago -
A
29.0 cm diameter coil consists of 23 turns of cylindrical copper
wire 2.00 mm in...
asked 8 minutes ago -
(1) Write the net ionic equation for the reaction that occurs
when equal volumes of 0.191...
asked 14 minutes ago -
Q1
Two of your friends each received the results of their
first midterm exam this term....
asked 25 minutes ago -
A 0.500-kg object, suspended from an ideal spring of spring
constant 30.2 N/m, is oscillating vertically....
asked 23 minutes ago -
Please help and show work. I keep getting the wrong answers for
these problems
1. Cell...
asked 20 minutes ago -
If there is a SNP in the read with respect to the
reference genome, how would a...
asked 23 minutes ago -
Early black-and-white television sets used an electron beam to
draw a picture on the screen. The...
asked 25 minutes ago -
What is the standard error of M (denoted as
σM ) ?
Options:
The mean of...
asked 49 minutes ago -
Explain the role of n, the sample size, in determining the size
of a generated confidence...
asked 38 minutes ago -
Kelsey Drums, Inc., is a well-established supplier of fine
percussion instruments to orchestras all over the...
asked 52 minutes ago