What is the balance in the Equity Investment account on December 31, 2022? Select one: a. $1,070,650 b. $1,064,770 c. $1,029,000 d. $1,117,200
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An investor company owns 25% of the common stock of an investee company. The investor has significant influence over the investee, and acquired its equity interest in the investee on January 1, 2021 for $1,029,000. On the date of acquisition, the investee’s
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- An investor company owns 25% of the common stock of an investee company. The investor has significant influence over the investee, and acquired its equity interest in the investee on January 1, 2021 for $1,323,000. On the date of acquisition, the investee’s stockholders’ equity was $5,292,000 and the fair values of the investee’s individual net assets were equal to their reported book values. During the year ended December 31, 2021, the investee reported net income of $126,000 and dividends of $25,200. During the year ended December 31, 2022, the investee reported net income of $151,200 and dividends of $37,800 The investor routinely sells inventory to the investee at a 30% profit margin. At December 31, 2021 and 2022, the investee held inventories purchased from the investor for $75,600 and $100,800 respectively. (All of these inventories on hand at the end of the year are sold by the investee to unaffiliated companies in the next period.) What amount of investment income from the…On January 1, 2021, an investor company acquired 25% of an investee company's common stock for $2,880,000. As a result of this transaction, the investor can exert significant influence over the investee. During each year ended December 31, 2021 and 2022 the investee reported $576,000 of net income and $240,000 of dividends. On January 1, 2021, the book value of the investee's net assets was $9,600,000 and all individual net assets had appraised fair values that equaled their reported book values. On December 31, 2022, what is the balance of the Equity Investment account on the Investor's balance sheet? Select one: a. $3,048, 000 b. $2,880,000 c. $3,552,000 d. $2,964,000At the beginning of the current year, an entity acquired 40% of the ordinary shares of an associate. On such date, assets and liabilities of the investee were recorded at fair value and the acquisition showed that goodwill of P1,000,000 was acquired. The investee reported net income of P8,000,000 for the current year. In December, the investee sold inventory costing P3,000,000 to the investor for P5,000,000. The inventory remained unsold by the investor at year-end. At the beginning of the current year, the investee sold equipment to the investor with a carrying amount of P2,500,000 for P4,000,000. The remaining life of the equipment is 5 years. What amount of investment income should be reported for the current year? a. 1,920,000 b. 1,800,000 c. 3,200,000 d. 2,400,000 Problem 4 An entity owned 100% of another entity’s preference shares and 20% of ordinary shares. The investee’s share capital outstanding at year-end included P5,000,000 of 10% cumulative preference…
- An investor company purchased 60,000 of the 500,000 outstanding shares of the investee company's common stock on January 1, 2021. During 2021, the investee company reported earnings for the year of $459,000, and declared and paid an $0.52 per share cash dividend during 2021. If the investor company uses the fair value method of accounting for its investment in the investee company, it should report Dividend Revenue from the investee for 2021 in the amount of $_______. (If there is no Dividend Revenue, then enter 0. Do not round your answer for any part of the computation.)An investor company purchased 121,000 of the 250,000 outstanding shares of the investee company's common stock for $79,000 on January 1, 2021. During 2021, the investee company declared and paid dividends of $55,000 and reported earnings for the year of $355,000. If the investor company uses the equity method of accounting for its investment in the investee company, its Equity Investment in the investee company account at December 31, 2021 should be $____________. (Do not round your answer for any part of the computation.)On January 1, 2019, an entity acquired 30% of the voting share capital of another entity for 2,000,000, which was equal to the carrying amount of interest, acquired. The investee reported net income of P1,500,000 for 2019 and paid dividend of P500, 000 on December 31, 2019. The investee reported net income of P1,000,000 for the six months ended June 30, 2020 and P2,500,000 for the year ended December 31, 2020 but paid dividend of P1,000,000 on October 2020. On July 1, 2020, the investor sold half of the investment for P2,000,000. The fair value of the retained investment is P2,200,000 on July 1, 2020 and P2,400,000 on December 31, 2020. The retained investments is to be measured at FVPL. 1. What amount of gain or sale of investment should be reported for 2020? a. 850,000 b. 700,000 c. 775,000 d. 500,000 2. What total amount of income should be reported in 2020? a. 2,250,000 b. 2,100,000 c. 1,950,000 d. 2,050,000
- On July 1, 2019, an investor company owns 20% of the common stock of an Investee and can exercise significant influence over the investee. On July 1, 2019, immedlately preceding the sale of 10% of the investee to an unaffiliated party, the balance of the Equity Investment account was $50,000. The Investor company sold the 106 Interest in the Investee for $30,000. The Investor company determined that after the sale of 10% it could no longer exert significant influence and that the remalning 106 investment has a readily determinable fair value. Immediately after the sale of the 10% interest, what is the carrying amount (I.e., balance) of the Equlty Investment and what method of accounting must the Investor use for the Equity Investment? Select one: a, Balance - $25,000 Method - Equity b. Balance $25,000 Method - Fair value C. Balance $30,000 Method - Fair value d. Balance- $ 30,000 Method Cost-basedOn 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200.The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows:Carrying Amount ($) Fair Value ($)AssetsCash 2,000 2,000Accounts receivable 10,000 10,000Inventory 64,000 68,000Equipment 320,000 232,000Accumulated depn - Equipment (96,000) -Patents 280,000 280,000LiabilitiesAccounts payable (16,000) (16,000)Debentures (64,000) (64,000)Required:a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.On January 1, 2019, Blackpink Company acquired 40% of the ordinary shares of an associate. On such date, assets and liabilities of the investee were recorded at fair value and the acquisition showed that goodwill of P1,000,000 was acquired. The investee reported net income of P8,000,000 for 2019. What amount of Share in Profit of Associate should be reported by Blackpink Company for 2019?
- An investor company purchased 42,000 of the 100,000 outstanding shares of the investee company's common stock for $382,000 on January 1, 2021. During 2021, the investee company declared dividends of $47,000 and reported earnings for the year of $194,000. If the investor company uses the equity method of accounting for its investment in the investee company, its Equity Investment in the investee company account at December 31, 2021 should be $____________. (Do not round your answer for any part of the computation.)On 1 July 2021, King Ltd acquired all the share capital of Queen Ltd for $1,800,000, and on that date Queen Ltd.'s equity were as follows: Share capital $1,200,000; Revaluation surplus $500,000 and Retained earnings $200,000. All the assets and liabilities of Queen Ltd. were recorded at fair value on 1 July 2021. During the financial year 2022, the following intragroup transactions occurred between King Ltd and Queen Ltd: Queen Ltd sold land to King Ltd for $400,000, which was $100,000 above cost. The land was still hold by King Ltd. King Ltd sold an equipment to Queen Ltd for $400,000. The carrying amount of equipment to King Ltd of $320,000. Both entities depreciate equipment at a rate of 10% p.a. on cost. Queen Ltd sold inventories costing $160,000 to King Ltd for $180,000. 1/4th of the inventories were still on hand with King Ltd. King Ltd received $15,000 of service revenue from Queen Ltd. Queen Ltd paid dividend of $30,000 and interest on loan of $8,000 to King Ltd. The tax rate…On January 1 2019, an entity purchased 40% of the outstanding ordinary shares of another entity for 5,000,000 when the net assets of the investee amounted to 10,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to fair value, except for land whose the fair value was 2,000,000 greater than carrying amount and inventory whose fair value was 1,500,000 greater than cost. The land was sold in 2019 and one-half of the inventory was sold during 2019 . During 2019, the investee reported net income of 8,000,000, issued 10% share dividend and paid cash dividend of 2,500,000. What is the investment income for 2019? a. 3,200,000 b. 2,100,000 c. 2,500,000 d. 3,300,000 What is the carrying amount of the investment on December 31,2019? a. 6,500,000 b. 6,100,000 c. 7,200,000 d. 7,300,000
