a) Journal Entries: | ||||
Date | Accounts Title | Debit $ | Credit$ | |
2018 | ||||
1-Feb | Equity Investment in Glover | 5400000 | ||
Cash | 5400000 | |||
(Being equity investment with 40% in Glover co's | ||||
200000 common stock) | ||||
30-Sep | Cash | 200000 | ||
Equity Investment in Glover | 200000 | |||
(Being dividend recd. @ $1 on 200000 common stock | ||||
of Glover Inc.) | ||||
31-Dec | Equity Investment in Glover | |||
Net Income of Glover | ||||
(Being 40% share of Glover's 2018 earned booked) | ||||
31-Dec | Depreciation-Goodwill | 220000 | ||
Equity Investment in Glover | 220000 | |||
(Being Excess of book value is treated as Goodwill | ||||
and depreciated on SLM with 10 years life) | ||||
(5400000-8000000*0.40)/10=$220000 | ||||
b) Journal Entries: | ||||
Date | Accounts Title | Debit $ | Credit$ | |
2018 | ||||
1-Feb | Available for Sale- Glover | 5400000 | ||
Cash | 5400000 | |||
(Being investment with5% in Glover co's | ||||
200000 common stock) | ||||
30-Sep | Cash | 200000 | ||
Dividend Income | 200000 | |||
(Being dividend recd. @ $1 on 200000 common stock | ||||
of Glover Inc.) | ||||
31-Dec | Available for Sale- Glover | 600000 | ||
Unrealised Income on re-valuation | 600000 | |||
(Being revaluation of investment at year end when | ||||
Glover share market value was $30 per share | ||||
200000*30 - 5400000 = 600000) | ||||
(No Goodwill depreciation & No annual income transfer entry required | ||||
if total investment is 5% of total capital of Glover) | ||||
2. On February 1, 2018, Henry Corporation purchased 200,000 shares of Glover, Inc., common stock for...
On January 4, 2018, Runyan Bakery paid $334 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan received dividends of $4.00 per share on December 15, 2018, and Lavery reported net income of $200 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018,...
On January 4, 2018, Runyan Bakery paid $346 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan received dividends of $2.80 per share on December 15, 2018, and Lavery reported net income of $260 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018,...
On January 4, 2018, Runyan Bakery paid $332 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $4.50 per share on December 15, 2018, and Lavery reported net income of $190 million for the year ended December 31, 2018....
On January 1, 2018, Cameron Inc. bought 10 % of the outstanding common stock of Lake Construction Company for $190 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $900 million. Their book value was $800 million, The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake's net income for the year ended December 31, 2018,...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $420 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $800 million. Their book value was $700 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake's net income for the year ended December 31, 2018, was...
On January 1, 2018. Cameron Inc. bought 10% of the outstanding common stock of Lake Construction Company for $190 million cash At the date of acquisition of the stock, Lake's net assets had a fair value of $900 million. Their book value was 5800 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake's net income for the year ended December 31, 2018, was...
On January 4, 2018, Runyan Bakery paid $358 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $3.50 per share on December 15, 2018, and Lavery reported net income of $320 million for the year ended December 31, 2018....
5 On January 1, 2018, Cameron Inc bought 30% of the outstanding common stock of Lake Construction Company for $420 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $800 million. Thelr book value was $700 million. The difference was attributable to the falr value of Lake's butlidings and its land exceeding book value, each accounting for one half of the difference Lake's net Income for the year ended December 31,...
Problem - On January 1, 2018, American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $210,000 cash. On that date, Short's book value and fair walu were both $40,000. The equity method is deemed appropriate for this investment Short's net income reported on December 31, 2018, was 50,000. During 2018, Short also paid cash dividends in the amount of $24.000 Required: Prepare the journal entries necessary to record the above information on American Corporation's...
On January 2, 2018, Smith Company paid $252,000 to acquire 10,000 shares of Pets Corp. The investment represented 25% of the total shares outstanding of Pets Corp. and gave Smith Company the ability to exert significant influence upon the operations of Pets Corp. During the year ended December 31, 2018, Pets Corp. paid dividends of $1.75 per share (declared and paid on November 12, 2018) and reported income of $259,000. The market value of Pets Corp. stock at December 31,...