Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 2, Problem 2.1.2E
Multiple-Choice Questions on Accounting for Equity Investments [AICPA Adapted]
Select the correct answer for each of the following questions.
2. In 20X0. Neil Company held the following investments in common stock:
• 25,000 shares of B&K Inc.’s 100,000 outstanding shares. Neil’s level of ownership gives it the ability to exercise significant influence over the financial and operating policies of B&K.
• 6,000 shares of Amal Corporation’s 309,000 outstanding shares.
During 20X0. Neil received the following distribution from its common stock investments:
![Chapter 2, Problem 2.1.2E, Multiple-Choice Questions on Accounting for Equity Investments [AICPA Adapted] Select the correct](http://dev-ingestion-image-output.s3-website-us-east-1.amazonaws.com/9781259916977/Chapter-2/images/html_16977-2-2.1.2e_image001.jpg)
What amount of dividend revenue should Neil report for 20X0?
a. $1,500
b. $4,200
c. $31,500
d. $34,200
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Investments in Stocks - This portfolio is composed of GKKB Company shares (GanyanKabaKatigasBash) and ABC Company shares. The shares were not held for trading and management has elected to designate the investments at fair value through other comprehensive income.
Date
Account
Debit
Credit
May 3, 2020
Investment in GKKB Company
25,250
Broker's fee
1,000
Cash
26,250
To record the acquisition of GKKB shares and its related transaction cost
Investment in ABC Company
32,450
Cash
32,450
To record the acquisition of ABC shares, acquired at P32.45 per share
December 31, 2020
Unrealized Gain / (Loss) on market changes
400
Investment in ABC Company
1,500
Investment in GKKB Company
1,900
To record the market value adjustment for 2020
May 28, 2021
Investment in ABC Company
5,000
Dividend income
5,000
Received 100 shares of ABC Company in lieu of cash dividends of P5…
Chapter 2 Solutions
Advanced Financial Accounting
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2QCh. 2 - Describe an investor’s treatment of an investment...Ch. 2 - How is the receipt of a dividend recorded under...Ch. 2 - How does carrying securities at fair value...Ch. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.12QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16AQCh. 2 - When is equity method reporting considered...Ch. 2 - How does the fully adjusted equity method differ...Ch. 2 - What is the modified equity method? When might a...Ch. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.4ECh. 2 - Acquisition Price Phillips Company bought 40...Ch. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Carrying an investment at Fair Value versus Equity...Ch. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.16AECh. 2 - Prob. 2.17AECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Investments Carried at Fair Value and Equity...Ch. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.23PCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25APCh. 2 - Equity-Method income Statement Wealthy...Ch. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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