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AveGali [126]
3 years ago
11

Change from the fair value method to the equity method Assume an investor company acquires for $256,000 an 8% investment in the

common stock of an investee company on February 15, 2018. The investor determined the common stock of the investee has a readily determinable fair value. On December 31, 2018, the fair value of the 8% common stock investment is $272,000, and the investor company made made all of the appropriate adjustments in preparation of the annual financial statements. On March 1, 2019, the investor company acquires an additional 17% of common stock of the investee for $612,000, thereby increasing the investor's overall ownership interest to 25%.
Required a. Prepare the journal entries the investor company should record on March 1, 2019. Note: If a journal entry is not required, select "N/A" as your answers for the drop-down options and leave the Debit and Credit answers blank (zero).
Business
1 answer:
matrenka [14]3 years ago
6 0

Answer:

Date         Account title and explanation      Debit        Credit

March 1    Equity investment                          $32,000

                ($612,000/17%)*8% - $256,000)

                       Unrealized holding gain                             $32,000

               (To adjust the value of equity investment)

Note: On 1 march, value of the investment value is increased which is unrealized based on 31 December fair value

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Excerpt from Areojet Corporation records for month of February: Per Unit Per Month Selling price $ 200,000 Direct materials used
EastWind [94]

Answer:

Work in process= $192,000

Explanation:

Giving the following information:

Direct materials used in production 40,000

Direct labor 10,000

Variable manufacturing overhead 2,000

Fixed manufacturing overhead $ 140,000

<u>The absorption costing method includes all costs related to production, both fixed and variable</u>. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

Work in process= 40,000 + 10,000 + 2,000 + 140,000

Work in process= $192,000

7 0
3 years ago
Some federal grants, such as categorical grants, ____________, while others, such as block grants, ____________.
Vinil7 [7]
Fund only individual citizens; fund only projects for states and localities
5 0
3 years ago
Operations management moves from knowing the needs of consumers to actually satisfying those needs.a) trueb) false
Mariana [72]

Answer:

<u>True</u>

<u>Explanation:</u>

Remember, no business operations would exist if there aren't any identified customer needs to solve.

Also, we need to bear in mind that Operations management activities are done in any business in other to efficiently (profitably) process raw materials,  labor, etc into the goods and services needed by consumers.

8 0
3 years ago
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 11 percent, has a YTM of 9 percent, and has
alexandr1967 [171]

Answer:

Results are below.

Explanation:

<u>To calculate the price of each bond, we need to use the following formula:</u>

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

<u>Bond X:</u>

Coupon= (0.11/2)*1,000= $55

YTM= 0.09/2= 0.045

Years to maturiy= 11 years

Bond Price​= 55*{[1 - (1.045^-11)] / 0.045} + [1,000/(1.045^11)]

Bond Price​= 469.1 + 616.2

Bond Price​= $1,085.3

<u>Bond Y:</u>

Coupon= (0.09/2)*1,000= $45

YTM= 0.11/2= 0.055

Years to maturiy= 11 years

Bond Price​= 45*{[1 - (1.055^-11)] / 0.055} + [1,000/(1.045^11)]5

Bond Price​= 364.16 + 554.91

Bond price= $919.07

3 0
3 years ago
After reviewing the reports of long-term changes in the macroenvironment, you must pick one element that you think Gerlach shoul
Elina [12.6K]

Answer:

Demographic Environment

Explanation:

When looking at the macroenvironmet and the likely changes happening in there, one seems to look at the broader condition of the economy which can be impacted by the monetary and fiscal policies, as well as employment and inflation rates.

The demographic environment is part of the six forces of the microenvironment and should be considered first amongst the three items listed. With this, a company can be able to identify the exact target markets needed for their respective products or services .

7 0
3 years ago
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