Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter D, Problem 12E
a.
To determine
Prepare the “current assets” section of the
b.
To determine
Identify the impact of change in fair value on the “
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During Year 1, its first year of operations, Galileo Company purchased two available-forsale investments as follows:
Please see the attachment for details:
Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $50 per share and the Pavlov Co. stock had a market value of $24 per share. Galileo Company had net income of $300,000 and paid no dividends for the year ended December 31, Year 1. All of the available-for-sale investments are classified as current assets.a. Prepare the Current Assets section of the balance sheet presentation for the availablefor-sale investments.b. Prepare the Stockholders’ Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.
Hawkeye Company’s balance sheet reported, under the equity method, its long-term investment in Raven Company for comparative years as follows:
Please see the attachment for details:
In addition, the Year 2 Hawkeye Company income statement disclosed equity earnings in the Raven Company investment as $25 million. Hawkeye Company neither purchased nor sold Raven Company stock during Year 2. The fair value of the Raven Company stock investment on December 31, Year 2, was $310 million. Explain the change in Investment in Raven Company Stock from December 31, Year 1, to December 31, Year 2.
Aylmer Corp has the following transactions relating to investments.
Aylmer Corp has a December 31 year end.
01-Sep-19 Aylmer Corp purchased 3,100 shares of Belmont Inc at $13.00 per share.
31-Oct-19 Belmont Inc paid dividends of $5.00 per share.
31-Dec-19 Belmont Inc shares had a fair value of $12.00 per share.
31-Dec-19 Belmont Inc reported net income of $63,000 for the year.
01-Mar-20 Aylmer Corp sold all of Belmont Inc shares for $17.00 per share.
Additional Information:
Assume Aylmer Corp uses the fair value through other comprehensive income (FV-OCI) method to account for its investments.
Dividend income is required to be recorded in a separate account.
REQUIRED:
Prepare the appropriate entries for the above transactions.
Chapter D Solutions
Financial And Managerial Accounting
Ch. D - Prob. 1ECh. D - Prob. 2ECh. D - Starks Products uses the cost method to account...Ch. D - Prob. 4ECh. D - Prob. 5ECh. D - Prob. 6ECh. D - Prob. 7ECh. D - On January 1, 20Y9, Valuation Allowance for...Ch. D - The investments of Charger Inc. include a single...Ch. D - Jets Bancorp Inc. purchased a portfolio of trading...
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