Question

Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events in its long-term investments

Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events in its long-term investments. 2017 Jan. 5 Selk purchased 50,000 shares (25% of total) of Kildaire's common stock for $1,200,000. Oct. 23 Kildaire declared and paid a cash dividend of $4.40 per share. Dec. 31 Kildaire's net income for 2017 is $1,284,000, and the fair value of its stock at December 31 is $31.20 per share 2018 Oct. 15 Kildaire declared and paid a cash dividend of $3.30 per share. Dec. 31 Kildaire's net income for 2018 is $1,596,000, and the fair value of its stock at December 31 is $33.20 per share 2019 Jan. 2 Selk sold all of its investment in Kildaire for $1,642,000 cash. Part 1 Assume that Selk has a significant influence over Kildare with its 25% share of stock. Required 1. Prepare journal entries to record these transactions and events for Selk. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 2017 2018 2019 Prepare journal entries to record these transactions and events for Selk. No Date General Journal Debit Credit 1Jan 05, 2017Long-term investments Kildaire 1,200,000 Cash 1,200,000 Oct 23, 2017 Cash 220,000 220,000 Long-term investments Kildaire 321,000 3 Dec 31, 2017 Long-term investments Kildaire Earnings from long-term investment 21,000 Part 1 Assume that Selk has a significant influence over Kildaire with its 25% share of stock. Required: 1. Prepare journal entries to record these transactions and events for Selk. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 2017 2018 2019 Prepare journal entries to record these transactions and events for Selk. Date General Journal Debit Credit No Oct 15, 2018 Cash 165,000 65,000 Long-term investments-Kildaire 399,000 2 Dec 31, 2018 Long-term investments-Kildaire 99,000 Earnings from long-term investment Part 1 Assume that Selk has a significant influence over Kildaire with its 25% share of stock. Required: 1. Prepare journal entries to record these transactions and events for Selk. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 2019 2017 2018 Prepare journal entries to record these transactions and events for Selk Date Debit Credit No General Journal 1,642.,000 Jan 02, 2019 Cash 165,000 ,200,000 Gain on sale of investment Long-term investments-Kildaire 2. Compute the carrying (book) value per share of Selk's investment in Kildaire common stock as reflected in the investment account on January 1, 2019. (Round your answer to 1 decimal place.) Answer is complete but not entirely correct. Carrying value per 179 3.Compute the net increase or decrease in Selk's equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire Answer is not complete. in Selk's equity netincreaseelsek'sequity Part 2 Assume that although Selk owns 25% of Kildaire's outstanding stock, circumstances indicate that it does not have a significant influence over the investee and that it is classified as an available-for-sale security investment. Required: 1. Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. Complete this question by entering your answers in the tabs below. 2017 2018 2019 Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment. General Journal Date Debit Credit No 1.200,000 | Jan 05, 2017 Long-term investments-AFS (Kİdare) ,200,000 Cash Part 2 Assume that although Selk owns 25% of Kildare's outstanding stock, circumstances indicate that it does not have a significant influence over the investee and that it is classified as an available-for-sale security investment. Required: 1. Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Complete this question by entering your answers in the tabs below. 2017 2018 2019 Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment. View transaction list Journal entry worksheet Kildaire declared and paid a cash dividend of $3.30 per share. Part 2 Assume that although Selk owns 25% of Kildaire's outstanding stock, circumstances indicate that it does not have a significant influence over the investee and that it is classified as an available-for-sale security investment. Required 1. Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Complete this question by entering your answers in the tabs below. 2017 2018 2019 Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment. View transaction list Journal entry worksheet Selk sold all of its investment in Kildaire for $1,642,000 cash. Note: Enter debits before credits 2. Compute the cost per share of Selk's investment in Kildaire common stock as reflected in the investment account on January 1, 2019. Investment cost per share 3. Compute the net increase or decrease in Selk's equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire. is

Answer 1

PART 1

PART 2

Part 1 Debit Credit General Journal 01-05-17 Long term investments-kildaire 1200000 Cash 1200000 23-10-17 Cash 220000 Long term investments-kildaire (50000* $4.40) 220000 31-12-17 Long term investments-kildaire 321000 Earnings from long term investment 321000 (1284000*25%) 15-10-18 Cash 165000 Long term investments-kildaire (50000*S$3.30 165000 31-12-18 Long term investments-kildaire 399000 Earnings from long term investment (1596000*25%) 399000 02-01-19 Cash 1642000 Gain on sale of investment 107000 1535000 Long term investments-kildaire 2) Carrying value on January 1,2019 Investment carrying amount original cost 1200000 Less:dividends 220000 321000 Plus:2017 earnings Less:dividends 165000 399000 1535000 Plus:2018 earnings Total (A) No. OF Shares(b) Carrying value(a/b) 50000 30.7 3) Change in selk's equity due to stock dividend Earnings(2017) Earnings(2018) 321000 399000 Gain on sale of investments 107000 827000 Net increase

Part 2 General Journal Debit Credit 01-05-17 Long term investments-AFS (kildaire) 1200000 Cash 1200000 23-10-17 Cash 220000 Dividend Revenue 220000 (50000*$4.40) 31-12-17 Fair value adjustment-AFS 360000 Unrealised gain-equity 360000 ($31.20-$24)*50000 shares 15-10-18 Cash 165000 Dividend Revenue 165000 (50000* $3.30) 31-12-18 Fair value adjustment-AFS 100000 Unrealised gain-equity 100000 ($33.20-$31.20) *50000 02-01-19 Cash 1642000 Gain on sale of investment 442000 Long term investments-AFS (kildaire) 1200000 02-01-19 Unrealised gain-equity 460000 Fair value adjustment-AFS 460000 2) Carrying value on January 1,2019 Investment carrying amount original cost(a) 1200000 No. OF Shares(b) 50000 Carrying value(a/b) 24 3) Change in selk's equity due to stock dividend Dividend revenue(2017) Dividend reveue(2018) 220000 165000 Gain on sale of investments 442000 827000 Net increase