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motikmotik
3 years ago
7

Evan Company reports net income of $140,000 each year and declares an annual cash dividend of $50,000. The company holds net ass

ets of $1,200,000 on January 1, 2017. On that date, Shalina purchases 40 percent of Evan's outstanding common stock for $600,000, which gives it the ability to significantly influence Evan. At the purchase date, the excess of Shalina's cost over its proportionate share of Evan's book value was assigned to goodwill. On December 31, 2019, what is the Investment in Evan Company balance (equity method) in Shalina's financial records?
Business
1 answer:
Taya2010 [7]3 years ago
7 0

Answer:

$708,000

Explanation:

The computation of Investment in Evan Company balance is shown below:-

Purchase of Evan stock = $600,000

Book Value of Evan Stock = Net assets - Given percentage

= $1,200,000 x 40%

= $480,000

Goodwill = Purchase of Evan stock - Book Value of Evan Stock

= $600,000 - $480,000

= $120,000

Life of Goodwill is Indefinite

Annual Amortization is Zero

Cost = $600,000

Income Accrued 2017 = Net income × Given percentage

= $140,000 x 40%

= $56,000

Dividend 2017 = Cash dividend × Given percentage

= $50,000 x 40%

= $20,000

Income Accrued 2018

= $140,000 x 40%

= $56,000

Dividend 2018

$50,000 x 40%

= $20,000

Income Accrued 2019

= $140,000 x 40%

= $56,000

Dividend 2019

$50,000 x 40%

= $20,000

Equals Investment in Evan, 31/12/2019 = Purchase of Evan stock + Income Accrued 2017 - Dividend 2017 + Income Accrued 2018 - Dividend 2018 + Income Accrued 2019 - Dividend 2019

= $600,000  + $56,000 - 20,000 + 56,000 - 20,000 + 56,000 - 20,000

= $708,000

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Answer:

B

Explanation:

Corporate code of ethics is defined as a set of laid down rules and regulation that is meant to inform and guides the workers towards professionally conducting themselves in a way that aligns with the mission and core values of the organization .

However , having a code of ethical conduct in place in an organization does not mean compliance , until necessary measures for compliance are put in place. Therefore it is possible to have the code of ethics with minimum or no compliance to it. Based on this , it can sometimes be viewed as thinly disguised attempts to mislead the public into thinking that the company behaves ethically.

5 0
3 years ago
Bob is evaluating a bond issue to determine the right price for the bond. In his evaluation, he gathers the following informatio
Elanso [62]

Answer:

The price of the bond is $1000. Thus, option a is the correct answer.

Explanation:

The price of a bond is calculated using the present value of the interest payments made by the bond, which is in the form of an annuity, plus the present value of the face value of the bond. The present value is calculated by discounting the annuity of interest and the face value by the YTM or yield to maturity. In case YTM is not provided, we assume that it is same as or equal to the coupon rate paid by the bond.

The formula for the price of the bond is attached.

Bond Price = 25 * [(1 - (1+0.025)^-8) / 0.025]  +  1000 / (1+0.025)^8

Bond Price = $1000

5 0
3 years ago
July 15 Declared a cash dividend payable to common stockholders of $169,000. Aug. 15 Date of record is August 15 for the cash di
Brilliant_brown [7]

Answer:

Explanation:

The journal entries are shown below:  

On July 15:

Retained earning A/c Dr  $169,000

    To Dividend payable    $169,000

(Being cash dividend declared is recorded)

On Aug 15:

No journal entry is required on the date of declared

On Aug 31:

Dividend payable A/c    $169,000

      To Cash A/c $169,000

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3 0
3 years ago
A company's gross profit was $118,350 and its net sales were $466,300. its gross margin ratio equals:
ladessa [460]

The gross margin ratio is a percentage resulting from dividing the amount of a company's gross profit by the amount of its net sales. In this case it would be 118,350/466,300 = 25.38%

3 0
3 years ago
Which of the following is the correct formula for profit?
Lisa [10]

Answer:

(Sales volume * Price) – (Variable costs + Fixed costs)

Explanation:

Profit is equal to Total sales less Total costs .

Here, Total costs is the addition of Variable and Fixed costs

(Sales Volume x Price) - (Variable Costs + Fixed Costs).

3 0
3 years ago
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