On December 31, 2020, the fair value per share of Hub Cap Company was $11.25 per share. Aylmer decided to sell it's shares in Hub Cap Company at that time (sale was not recorded on the trial balance). Hint: after you record the sale, be sure to close the gain or loss on sale to retained earnings similar to how the sale was accounted for in TR11-7 in class.
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- On January 1, 2019, Pat Archi Inc purchased marketable equity securities for P2,000,000. The securities do not qualify as financial asset held for trading. The entity elected to present changes in fair value in other comprehensive income. On December 31, 2019, the securities have a market value of P2,500,000. The journal entry at year-end should include a credit to: a.Unrealized loss - OCI, P500,000 b.Unrealized gain - OCI, P500,000 c.Financial asset - FVOCI, P2,500,000 d.Financial asset - FVOCI, P500,000Following is a list of investments owned by Ivanhoe Ltd., as of the company’s year-end, December 31, 2020: Investment No. Shares Cost Fair Value HFX Corporation 1,000 $8.00 $7.10 FDY Ltd. 3,000 6.90 6.95 CTN Corporation 4,600 5.00 5.80 On January 15, 2021, Ivanhoe sold the shares in CTN Corporation for $6.25 per share. Prepare the journal entries required to record the sale, assuming the company uses the fair value through other comprehensive income without recycling method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 15, 2021 (To adjust to current fair value) (To record the sale of shares) (Reclassification…Requirement 1: Journal Entry : Record the purchase of KT Manufacturing’s capital stock for $52.4 million. Record the entry to adjust the fair value. Record the entry for KT's net income. Record the fair value adjustment. Requirement 2: Joiurnal Entry : Record the entry to adjust the fair value. Record the sale of stock on January 20, 2025 for $30.8 million.
- AsapHamilton Companys balance sheet on January 1, 2019, was as follows: Korbel Company is considering purchasing Hamilton (a privately held company) and discovers the following about Hamilton: a. No allowance for doubtful accounts has been established. A 10,000 allowance is considered appropriate. b. Marketable securities are valued at cost. The current market value is 60,000. c. The LIFO inventory method is used. The FIFO inventory of 140,000 would be used if the company is acquired. d. Land, included in property, plant, and equipment, which is recorded at its cost of 50,000, is worth 120,000. The remaining property, plant, and equipment is worth 10% more than its depreciated cost. e. The company has an unrecorded trademark that is worth 70,000. f. The companys bonds are currently trading for 130,000. g. The pension liability is understated by 40,000. Required: 1. Compute the amount of goodwill if Korbel agrees to pay 500,000 cash for Hamilton. 2. Next Level What are the reasons that the book value of Hamiltons net identifiable assets differ from their market value? 3. Prepare the journal entry to record the acquisition on the books of Korbel assuming Hamilton is liquidated. 4. If Korbel agrees to pay only 400,000 cash, how much goodwill exists? 5. If Korbel pays only 400,000 cash, prepare the journal entry to record the acquisition on its books, assuming Hamilton is liquidated.Refer to the information in RE13-11. Assume that on December 31, 2019, the investment in Cornett Company stock has a market value of 10,500. Prepare the year-end journal entry to record the unrealized gain or loss.
- Otter Tail, Inc., began operations in January 2015 and had the following reported net income or loss for each of its 5 years of operations: At December 31, 2019, Otter Tails capital stock was comprised of the following: Otter Tail has never paid a cash or stock dividend. There has been no change in the capital accounts since Otter Tail began operations. The appropriate state law permits dividends only from retained earnings. Required: Prepare a worksheet showing the maximum amount available for cash dividends on December 31, 2019, and how it would be distributable to the holders of the common shares and each of the preferred shares. Show supporting computations in good form.Presented below is information related to the purchases of common stock by Indigo Company during 2020. Cost(at purchase date) Fair Value(at December 31) Investment in Arroyo Company stock $ 90,000 $ 69,000 Investment in Lee Corporation stock 229,000 279,000 Investment in Woods Inc. stock 188,000 199,000 Total $ 507,000 $ 547,000 (Assume a zero balance for any Fair Value Adjustment account.) (a) What entry would Indigo make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option? (b) What entry would Indigo make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Indigo did not select the fair value option for these investments? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0…On January 1, 2018 Alexes Company purchased market marketable equity securities to be held as trading for 5 000 000. The entity also paid transaction cost amounting to P 200 000. The securities had a market value of 5 500 000 on December 31, 2018 and the transaction cost that would be incurred on sale is estimated at 100 000. No securities were sold in 2018. What amount of unrealized gain or loss on these securities should be reported in the 2018 income statement?
- ABC Co. acquired equity securities on May 25, 2020. The acquisition did not result in significant influence over the investee company. The fair value of the investment at December 31, 2020 was $76,000 and $108,000 at December 31, 2021.The adjustment to the Fair Value Adjustment account at December 31, 2021 would be? a. $8,000 debit. b. $32,000 debit. c. $32,000 credit. d. $8,000 credit.Following is a list of investments owned by Martinez Ltd., as of the company’s year-end, December 31, 2020: Investment No. Shares Cost Fair Value HFX Corporation 1,200 $9.00 $8.20 FDY Ltd. 2,100 6.50 6.55 CTN Corporation 3,700 7.00 7.60 On January 15, 2021, Martinez sold the shares in CTN Corporation for $8.10 per share. Prepare the journal entries required to record the sale, assuming the company uses the fair value through other comprehensive income without recycling method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 15, 2021 (To adjust to current fair value) (To record the sale of shares) (Reclassification…An investor is considering the purchase of shares in either Gees Baking Ltd or 9 west Ltd. Both companies are in the same line of business and their accounts are summarised below: Income statements for the year ended 31 December 2019 Gees Baking Ltd 9 west Ltd $000 $000 $000 $000 Sales revenue 596 678 Cost of sales (394) (526) ––––– –––––– Gross profit 202 152 Expenses: Administrative (36) (45)…