Homework Answers
Solution a:
| Computation of net income reported by Winston - Cost method | |||
| Particulars | 20X2 | 20X3 | 20X4 |
| Operating income | $100,000.00 | $60,000.00 | $250,000.00 |
| Add: Dividend revenue | $12,000.00 | $24,000.00 | $20,000.00 |
| Net Income | $112,000.00 | $84,000.00 | $270,000.00 |
Solution b:
| Computation of net income reported by Winston - Equity method | |||
| Particulars | 20X2 | 20X3 | 20X4 |
| Operating income | $100,000.00 | $60,000.00 | $250,000.00 |
| Add: Share in income of Fullbright company | $28,000.00 | $16,000.00 | $10,000.00 |
| Net Income | $128,000.00 | $76,000.00 | $260,000.00 |
Add Answer to:
Cost versus Equity Reporting Winston Corporation purchased 40 percent of the stock of Fullbright Company on...
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at...
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Winston Corporation Fullbright Company Year Operating Income Dividends Net Income Dividends 20X2 $ 100,000 $ 40,000 $ 70,000...
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at...
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Year 20X2 20x3 20x4 Winston Corporation Operating Income Dividends $100,000 $ 40,000 60,000 80,000 250,000 120,000 Fullbright Company...
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at...
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Winston Corporation Fullbright Company Year Operating Income Dividends Net Income Dividends 20X2 $ 100,000 $ 40,000 $ 70,000...
(a) carrying the investment at FAIR VALUE please do not copy others answer, thank you. Chapter...
(a) carrying the investment at FAIR VALUE
please do not copy others answer, thank you.
Chapter 2 Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No Differential 85 E2-4 Carrying an Investment at Fair Value versus Equity Method Reporting Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock...
Pizza Corporation purchased 100 percent of the common stock of Slice Corporation on January 1, 20X2,...
Pizza Corporation purchased 100 percent of the common stock of Slice Corporation on January 1, 20X2, by issuing 48,000 shares of its $7 par value common stock. The market price of Pizza’s shares at the date of issue was $26. Slice reported net assets with a book value of $1,136,000 on that date. The amount paid in excess of the book value of Slice’s net assets was attributed to the increased value of patents held by Slice with a remaining...
Azure Enterprises acquired 80 percent of Brown Corporation's voting common stock on January 1, 20X3, for...
Azure Enterprises acquired 80 percent of Brown Corporation's voting common stock on January 1, 20X3, for $392,000. At that date, the fair value of the noncontrolling interest of Brown Corporation was $98,000. Immediately after Azure acquired its ownership, Brown purchased 60 percent of Coral Company's stock for $129,000. The fair value of the noncontrolling interest of Coral Company was $86,000 at that date. During 20X3, Azure reported operating income of $250,000 and paid dividends of $95,000. Brown reported operating income...
Smart Company issued $120,000 of 10 percent bonds on January 1, 20X1, at 120. The bonds...
Smart Company issued $120,000 of 10 percent bonds on January 1, 20X1, at 120. The bonds mature in 10 years and pay 10 percent interest annually on December 31. Phone Corporation holds 80 percent of Smart’s voting shares, acquired on January 1, 20X1, at underlying book value. On January 1, 20X4, Phone purchased Smart bonds with a par value of $49,500 from the original purchaser for $54,450. Phone uses the modified equity method in accounting for its ownership in Smart....
Slanted Building Supplies purchased 32 percent of the voting shares of Flat Flooring Company in March...
Slanted Building Supplies purchased 32 percent of the voting shares of Flat Flooring Company in March 20X3. On December 31, 20X3, the officers of Slanted Building Supplies indicated they needed advice on whether to use the equity method or to carry the investment at fair value in reporting their ownership in Flat Flooring. a. What factors should be considered in determining whether equity-method reporting is appropriate? b. Which of the two approaches is likely to show the larger reported contribution...
Ravine Corporation purchased 30 percent ownership of Valley Industries for $90,000 on January 1, 20X6, when...
Ravine Corporation purchased 30 percent ownership of Valley Industries for $90,000 on January 1, 20X6, when Valley had capital stock of $240,000 and retained earnings of $60,000. During the period of January 1, 20X6, through December 31, 20X9, the market value of Ravine's investment in Valley's stock increased by $10,000 each year. The following data were reported by the companies for the years 20X6 through 20X9: Dividends Declared Year Operating Income, Ravine Corporation Net Income, Valley Industries Ravine Valley 20X6...
Ravine Corporation purchased 40 percent ownership of Valley Industries for $116,400 on January 1, 20X6, when...
Ravine Corporation purchased 40 percent ownership of Valley Industries for $116,400 on January 1, 20X6, when Valley had capital stock of $246,000 and retained earnings of $45,000. The following data were reported by the companies for the years 20X6 through 20X9: Dividends Declared Operating Income, Net Income, Valley Year Ravine Corporation Valley Industries Ravine 20X6 20X7 20X8 20X9 $149,000 94,000 224,000 169,000 $41,000 61,000 10,000 51,000 $ 74,000 $31,000 74,000 94,000 104,000 51,000 40,000 31,000 Required: a. What net income...
Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock increased by $20,000 each year. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership: Year 20X2 20x3 20x4 Winston Corporation Operating Income Dividends $100,000 $ 40,000 60,000 80,000 250,000 120,000 Fullbright Company...
(a) carrying the investment at FAIR VALUE
please do not copy others answer, thank you.
Chapter 2 Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No Differential 85 E2-4 Carrying an Investment at Fair Value versus Equity Method Reporting Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. During the period of January 1, 20X2, through December 31, 20X4, the market value of Winston's investment in Fullbright's stock...
Azure Enterprises acquired 80 percent of Brown Corporation's voting common stock on January 1, 20X3, for $392,000. At that date, the fair value of the noncontrolling interest of Brown Corporation was $98,000. Immediately after Azure acquired its ownership, Brown purchased 60 percent of Coral Company's stock for $129,000. The fair value of the noncontrolling interest of Coral Company was $86,000 at that date. During 20X3, Azure reported operating income of $250,000 and paid dividends of $95,000. Brown reported operating income...
Ravine Corporation purchased 40 percent ownership of Valley Industries for $116,400 on January 1, 20X6, when Valley had capital stock of $246,000 and retained earnings of $45,000. The following data were reported by the companies for the years 20X6 through 20X9: Dividends Declared Operating Income, Net Income, Valley Year Ravine Corporation Valley Industries Ravine 20X6 20X7 20X8 20X9 $149,000 94,000 224,000 169,000 $41,000 61,000 10,000 51,000 $ 74,000 $31,000 74,000 94,000 104,000 51,000 40,000 31,000 Required: a. What net income...
Most questions answered within 3 hours.
-
You purchase your daily coffee at the Chemist’s Coffeehouse and
have a choice of two cups:...
asked 10 minutes ago -
Problem 16-51 Sales
Activity Variance (LO 16-3)Odessa, Inc., reports the following
information concerning operations for the...
asked 35 minutes ago -
Pictured on the right are thee point charges Q1 = 18.4 μC, Q2 =
-30.6 μC,...
asked 37 minutes ago -
A graduate student is conducting research in psychology and
needs to obtain the IQ scores of...
asked 1 hour ago -
R2.84: There are 2 defective products in a production lot of 10.
An inspector randomly selected...
asked 2 hours ago -
Consider the following equilibrium system: COCl2(g) CO(g) +
Cl2(g) A 10.00 L evacuated flask is filled...
asked 3 hours ago -
1) What are the two distinct steps that one needs to perform
when developing a data...
asked 3 hours ago -
2) Write a C++ program that uses a class called “Degree” to
obtain the trigonometric
values...
asked 4 hours ago -
1. In eukaryotic cells the genomes of
&
asked 4 hours ago -
The standard enthalpy of propanol (C3H7OH) is -303.0 kJ/mol.
Compute both of the
gross and net...
asked 4 hours ago -
Why PWM using H-bridge for control motor speed is more power
effiecient than the linear amplifier...
asked 4 hours ago -
In 1999, Carly Fiorina famously said,"I hope that we are at a
point that everyone is...
asked 4 hours ago