The fair value of the shares held by sanborn

Assignment Help Accounting Basics
Reference no: EM13996122

On January 2, 2011, Sanborn Tobacco, Inc., bought 5% of Jackson Industry's capital stock for $90 million as a temporary investment. Sanborn realized that these securities normally would be classified as available-for-sale, but elected the fair value option to account for the investment. Jackson Industry's net income for the year ended December 31, 2011, was $120 million. The fair value of the shares held by Sanborn was $98 million at December 31, 2011. During 2011, Jackson declared a dividend of $60 million.

Required:

1. Would this investment be classified on Sanborn's balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other? Explain.

2. Prepare all appropriate journal entries related to the investment during 2011.

3. Indicate the effect of this investment on 2011 income before taxes. 

Reference no: EM13996122

Questions Cloud

How do you draw the chemical equation : How do you draw the chemical equation including the transition state for Sn1 and Sn2 reactions for (CH3)3 - OH + HX and CH3(CH2)3(OH) + HX ?
An business development executive travels extensively : An business development executive travels extensively for business. Her company offers two options to offset her driving expenses. Option 1 provides a car allowance of 490 dollars per month and a mileage reimbursement of $0.34/mile for fuel, insuranc..
Determine demand function-inverse demand function for good : The demand for good X is given by QXd = 6,000 - (1/2)PX - PY + 9PZ + (1/10)M Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while the average income of individuals consuming this product is M = $70,000. Determ..
What accounts for the stability of a tertiary : What accounts for the stability of a tertiary carbocation, with all methyl substituents?
The fair value of the shares held by sanborn : Would this investment be classified on Sanborn's balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other? Explain.
Various contemporary authors have researched backwards : Various contemporary authors have “researched backwards” very simple foods such as salt, eggs, cod, milk, etc. to demonstrate their concerns about food production, the economy, and health in the US. In other words, these analysts have looked at how f..
Elementary school quality from residential property values : The table on federal income tax rates facing various income groups suggests that the marginal tax rate in the United States has fallen. What would be your prediction as to how this decline in marginal tax rates could affect the quantity of Labor supp..
Why are sn1 reactions not considered stereospecifc : Why are SN1 reactions not considered stereospecifc, in contrast with SN2 reactions?
Faced by a firm in oligopolistic competition : Describe the demand and marginal revenue curves faced by a firm in a purely competitive market. Are they different from those faced by a firm in oligopolistic competition? If so, why?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd