AFM491 Lecture Notes - Lecture 2: Income Statement, Book Value, Comprehensive Income

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purplecod222

28 Feb 2018

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM491

Professor

Robert Ducharme

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Document Summary

To record 25% of stergis"s year 5 net income. To record 25% of stergis"s year 5 oci. To record 25% of stergis"s year 5 dividends. To record 25% of stergis"s year 6 net income. To record 25% of stergis"s year 6 oci. Blake should disclose the following with respect to its investment in stergis: The name and principal place of business of the associate. The method used to report the investment in the associate. Equity method income from blake"s investment in stergis should be reported separately on the income statement and the carrying amount of this investment should be reported separately on the balance sheet. The nature of its relationship with stergis and its percentage ownership. Summarized financial information for stergis, including the aggregated amounts of assets, liabilities, revenues, and net income. Nature and extent of any significant restrictions on the ability of stergis to transfer funds to.

Related Questions

Bowden declares and pays a $90,000 cash dividend to itsstockholders each year on September 15. Bowden reported net incomeof $400,000 in 2017 and $352,000 in 2018. Each income figure wasearned evenly throughout its respective year.

On July 1, 2018, Fisher sold 10 percent (18,500 shares) ofBowden's outstanding shares for $320,000 in cash. Although it soldthis interest, Fisher maintained the ability to significantlyinfluence Bowden's decision-making process.

Prepare the journal entries for Fisher for the years of 2017 and2018. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field. Donot round intermediate calculations. Round your final answers tothe nearest whole dollar.)

Record cost of 74,000 shares of Bowden Company.â

Record the annual dividend declared and received fromBowden.

Record accrue 2017 income based on 40% ownership of Bowden.

Record amortization of $66,000 excess patent fair value[indicated in problem] over 15 years.

Record the entry to accrue Â½ year income of 40% ownership.

Record Â½ year amortization of patent to establish correct bookvalue for investment as of 7/1/18.

Record 18,500 shares of Bowden Company sold; investment basiscomputed below.

Record annual dividend declared and received.

Record Â½ year income based on remaining 30% ownership.

Record Â½ year of patent amortization.

blushtermite95

On January 1, 2017, Fisher Corporation purchased 40 percent(74,000 shares) of the common stock of Bowden, Inc. for $978,000 incash and began to use the equity method for the investment. Theprice paid represented a $66,000 payment in excess of the bookvalue of Fisher's share of Bowden's underlying net assets. Fisherwas willing to make this extra payment because of a recentlydeveloped patent held by Bowden with a 15-year remaining life. Allother assets were considered appropriately valued on Bowden'sbooks. Bowden declares and pays a $90,000 cash dividend to itsstockholders each year on September 15. Bowden reported net incomeof $400,000 in 2017 and $352,000 in 2018. Each income figure wasearned evenly throughout its respective year. On July 1, 2018,Fisher sold 10 percent (18,500 shares) of Bowden's outstandingshares for $320,000 in cash. Although it sold this interest, Fishermaintained the ability to significantly influence Bowden'sdecision-making process.

Prepare the journal entries for Fisher for the years of 2017 and2018. (If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field. Do not roundintermediate calculations. Round your final answers to the nearestwhole dollar.)

Record cost of 74,000 shares of Bowden Company.â

Record the annual dividend declared and received fromBowden.

Record accrue 2017 income based on 40% ownership of Bowden.

Record amortization of $66,000 excess patent fair value[indicated in problem] over 15 years.

Record the entry to accrue Â½ year income of 40% ownership.

Record Â½ year amortization of patent to establish correct bookvalue for investment as of 7/1/18.

Record 18,500 shares of Bowden Company sold; investment basiscomputed below.

Record annual dividend declared and received. Record Â½ yearincome based on remaining 30% ownership.

Record Â½ year of patent amortization.

violetdeer427

Houghton Company began business on January 1, 2015 by issuingall of its 1,300,000 authorized shares of its $2 par value commonstock for $25 per share. On June 30, Houghton declared a cashdividend of $2.25 per share to stockholders of record on July 31.Houghton paid the cash dividend on August 30. On November 1,Houghton reacquired 260,000 of its own shares of stock for $30 pershare. On December 22, Houghton resold 130,000 of these shares for$36 per share.

Required:

Prepare all of the necessary journal entries to record theevents described above.

1. Record the issue of 1,300,000 authorized shares of $2 parvalue for $25 per share.

2. Record the declaration of the cash dividends of $2.25 pershare.

3. Record the payment of the cash dividends of $2.25 pershare.

4. Record the repurchase of 260,000 shares for $30 pershare.

5. Record the reissue of 130,000 share for 36 per share.

Prepare the stockholders' equity section of the balance sheet asof December 31, 2015 assuming that the net income for the year was$5,500,000.

HOUGHTON COMPANY
Stockholdersâ Equity
Balance Sheet as of 12/31/2015




	0

TotalStockholders' Equilty

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AFM491 Lecture Notes - Lecture 2: Income Statement, Book Value, Comprehensive Income

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