Reference no: EM132751069
Question - Davis Corporation acquired 40% of the voting common stock of ABC, Inc. on January 1, 20X2, for $250,000, giving Davis Corporation significant influence over the operations of ABC, Inc. For the year ended December 31, 20X2, ABC, Inc.'s audited financial statements reported a net income of $50,000. Also, ABC, Inc. declared and paid total dividends to its shareholders of $25,000 on December 31, 20X2. The fair value of the shares purchased by Davis Corporation was $280,000 on December 31, 20X2.
Required -
a) How should Davis Corporation account for its investment in ABC, Inc.?
b) Prepare the 20X2 journal entries made to account for the investment on Davis Corporation's books.
c) Based on your answers to parts (a) and (b), what is the balance in the "Investment in ABC, Inc." account that will appear in the Statement of Financial Position on December 31, 20X2? Would your answer be any different if the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 159, "Fair Value Option for Financial Assets and Financial Liabilities" were applied?
d) Would any of your journal entries in answer to part (b) have been different if Davis Corporation had acquired 40% of the voting common stock on July 1, 20X2?
|
How much should each payment be
: 30-year mortgage which charges 3.3% interest. If Monica makes payments at the beginning of each month, how much should each payment be?
|
|
What amount should be debited to the asset account
: At the time the machine was purchased, the market rate of interest was 8%. What amount should be debited to the asset account
|
|
Characteristics and human control on coastal erosion
: Different types of beaches, their characteristics and human control on coastal erosion. Seagrasses and seaweeds ecosystems, their characteristics and importance
|
|
How big a monthly payment could the ross family afford
: Using the maximum ratios, How big a monthly payment could the Ross family afford if their gross (before-tax) monthly income amounted to $3,000?
|
|
How should Davis Corporation account for its investment
: ABC, Inc.'s audited financial statements reported a net income of $50,000. How should Davis Corporation account for its investment in ABC, Inc.
|
|
What is conroy consulting corporation stock worth today
: If D0 = $3.20, rs = 13.0%, and gL (long-term constant growth after year 5) = 3.0%, then what is CCC's stock worth today (P0)?
|
|
Think about the ecological biome
: Think about the ecological biome where you currently live or grew up. Would you classify it as temperate forest, temperate grassland, or another biome?
|
|
Compute the basic EPS
: Compute the basic EPS in the following independent scenarios: Dimaculangan issued 10,000 shares of 10%, 100 par, cumulative, preference shares
|
|
What are some of the reasons for population explosion
: Globally, the human population is increasing exponentially. What are some of the reasons for this population explosion?
|