Reference no: EM132747221
Question - Short Essay on Investments and Bonds Payable
The following data, presented in alphabetical order, are taken from the records of Nieto Corporation.
Accounts payable $250,000
Accounts receivable 90,000
Accumulated depreciation-buildings 180,000
Accumulated depreciation-equipment 52,000
Allowance for doubtful accounts 6,000
Bonds payable (10%, due 2025) 400,000
Buildings 900,000
Cash 142,000
Discount on bonds payable 20,000
Equipment 275,000
Goodwill 150,000
Inventory 170,000
Investment in Tabares, Inc. stock (22% ownership) 600,000
Land 520,000
Notes payable (due 2018) 70,000
Patents 50,000
Prepaid insurance 16,000
Salaries payable 23,000
Short-term investment 185,000
Required -
1. Give three main reasons why companies like Nieto Corp. invests in other companies.
2. What kind of investment does Nieto Corp. hold in Tabares, Inc.? Debt or equity investment? Explain the difference between debt and equity investment.
3. Given the percentage ownership on Tabares, Inc., can Nieto Corp. exercise influence or control over the management of Tabares, Inc.?
4. If Bonds Payable were issued at a premium of $20,000, what should Total Liabilities show as a total?
5. If Bonds Payable were issued at face value, what should Total Liabilities show as a total?
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