Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Question
Chapter 2, Problem 2.3.3E
To determine
Concept introduction Equity approach is most reliable and it is used generally in calculating the invested assets in the firm when the investor holds
To choose: The correct answer from the options.
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Students have asked these similar questions
Equity method journal entries (price equals book value)
Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method.
a. An investor purchases 14,400 common shares of an investee at $16 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the
investee.
b. The investee reports net income of $172,800.
c. The investor receives a cash dividend of $1.50 per common share from the investee.
d. The investor sells all 14,400 common shares of the investee for $260,280.
General Journal
Ref.
Description
Debit
Credit
a.
b.
C.
d.
Equity investment
For the purposes of equity accounting, it is presumed that tne investor has significant influence over the other
entity where the investor holds:
Select one:
0. 75% or more of the voting power of the investee.
b. 205 or more of the voting power of the investee.
C. between 5% and 105 of the voting power of the investee.
d. 1005 of the voting power of tne investee.
The following was reported by Church Financial in its December 31, 2024, financial statements:
Investments at FVTPL, December 31, 2023
Investments at FVTPL, December 31, 2024.
Investment income or (loss)
Additional information:
1.
2.
3.
$13,400
18,300
(600)
The investments at FVTPL are investments in equity securities held for trading purposes.
Investment income or loss consists of: holding gain on the FVTPL investments of $3,100, and loss on sale of the FVTPL
investments of $3,700.
The carrying amount of the FVTPL investment sold was $4,900.
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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