Question

In: Accounting

1.On January​ 1, 2016, TXU Europe Corporation purchased​ 40% of the outstanding stock of Alberta Power...

1.On January​ 1, 2016, TXU Europe Corporation purchased​ 40% of the outstanding stock of Alberta Power Pool Corporation for​ $800,000. Net income reported by Alberta Power Pool Corporation for 2016 and 2017​ was, respectively,​ $100,000 and​ $125,000. Dividends paid by Alberta Power Pool Corporation during 2016 and 2017​ were, respectively,​ $60,000 and​ $75,000. The long−term investment will appear on TXU Europe​ Corporation's December​ 31, 2016, balance sheet​ at:

A.​$800,000

B.​$776,000

C.​$816,000

D.​$840,000

2. The adjusting entry for investments at fair value through other comprehensive income contains a credit to Investments for​ $651. The income statement will​ reflect:

A.other comprehensive​ income/loss of​ ($651)

B.an extraordinary gain of​ $651

C.revenue of​ $651

D.​nothing, because​ gain/loss is not reported on the income statement

3.The​ Gain/Loss on Investment account may appear on which financial​ statement?

A.the income statement under the​ "other income/expense" section

B.the balance sheet under the​ "assets" section as a contra asset

C.the balance sheet under the​ "liabilities" section

D.the balance sheet as part of the​ shareholders' equity

Solutions

Expert Solution

Question 1

1.On January​ 1, 2016, TXU Europe Corporation purchased​ 40% of the outstanding stock of Alberta Power Pool Corporation for​ $800,000. Net income reported by Alberta Power Pool Corporation for 2016 and 2017​ was, respectively,​ $100,000 and​ $125,000. Dividends paid by Alberta Power Pool Corporation during 2016 and 2017​ were, respectively,​ $60,000 and​ $75,000. The long−term investment will appear on TXU Europe​ Corporation's December​ 31, 2016, balance sheet​ at:

a) $ 8,00,000

Explanation : Net income and dividends does not affect the cost price of investment which is recorded in balance sheet (asset side) at cost.

Question 2

The adjusting entry for investments at fair value through other comprehensive income contains a credit to Investments for​ $651. The income statement will​ reflect:

A.other comprehensive​ income/loss of​ ($651)

Explanation : Incom from investment are not shown in income statement.

Question 3

The​ Gain/Loss on Investment account may appear on which financial​ statement?

A.the income statement under the​ "other income/expense" section

Explanation : Gain/ loss on investment is shown under " other income expenses section" in income statement. Rather it is shown in balance sheet.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

1. On January​ 1, 2016, TXU Europe Corporation purchased​ 40% of the outstanding stock of Alberta...
1. On January​ 1, 2016, TXU Europe Corporation purchased​ 40% of the outstanding stock of Alberta Power Pool Corporation for​ $800,000. Net income reported by Alberta Power Pool Corporation for 2016 and 2017​ was, respectively,​ $100,000 and​ $125,000. Dividends paid by Alberta Power Pool Corporation during 2016 and 2017​ were, respectively,​ $60,000 and​ $75,000. The long−term investment will appear on TXU Europe​ Corporation's December​ 31, 2017, balance sheet​ at: A.​$864,000 B.​$836,000 C.​$746,000 D.$890,000 2.Retail Energy Corporation paid​ $1,300,000 on January​...
Sox Corporation purchased a 40% interest in Hack Corporation for $1,975,000 on January 1, 2016. On...
Sox Corporation purchased a 40% interest in Hack Corporation for $1,975,000 on January 1, 2016. On November 1, 2016, Hack declared and paid $2.9 million in dividends. On December 31, Hack reported a net loss of $4.6 million for the year. What amount of loss should Sox report on its income statement for 2016 relative to its investment in Hack?
On January 1, 20X1, Warner Corporation purchased 40% of the common stock of ABC Corporation for...
On January 1, 20X1, Warner Corporation purchased 40% of the common stock of ABC Corporation for $400,000. This purchase gives Warner a significant influence in ABC?s operations. During the year, ABC earned total net income of $200,000 and paid total dividends of $40,000 to common stockholders. The fair market value of the stock at year end is $450,000. Prepare the required 20X1 journal entries for the Warner Corporation?s purchase of stock in ABC Corporation:
On 1/1/2016, California Corporation purchased 75% of the outstanding voting stock of San Diego Corporation for...
On 1/1/2016, California Corporation purchased 75% of the outstanding voting stock of San Diego Corporation for $2,400,000 paid in cash. On the date of the acquisition, San Diego’s shareholders’ equity consisted of the following: Common stock, $10 par                 $1,000,000 APIC                                                   600,000 Retained Earnings                               800,000 Total SE                                         $2,400,000 The excess fair value of the net assets acquired was assigned 10% to undervalued Inventory (sold in 2016), 40% to undervalued PPE assets with a remaining useful life of 8 years, and 50%...
On 1/1/2016, XYZ Corporation purchased 75% of the outstanding voting stock of Sally Corporation for $2,400,000...
On 1/1/2016, XYZ Corporation purchased 75% of the outstanding voting stock of Sally Corporation for $2,400,000 paid in cash.  On the date of the acquisition, Sally’s shareholders’ equity consisted of the following: Common stock, $10 par                 $1,000,000 APIC                                                   600,000 Retained Earnings                               800,000 Total SE                                         $2,400,000 The excess fair value of the net assets acquired was assigned 10% to undervalued Inventory (sold in 2016), 40% to undervalued PPE assets with a remaining useful life of 8 years, and 50% to Goodwill. Comparative trial balances of XYZ...
Grant Company acquired 40% of the voting stock of Jake Corporation on January 1, 2016, for...
Grant Company acquired 40% of the voting stock of Jake Corporation on January 1, 2016, for $50,000,000. Basis differences were attributed entirely to goodwill. During the 5-year period from January 1, 2016 through December 31, 2020, Jake reported total net income of $23,000,000 and paid $8,000,000 in dividends. During 2021, Jake reported net income of $3,000,000 and paid $800,000 in dividends. Required: a. Calculate the balance in Investment in Jake, reported on Grant’s December 31, 2020 balance sheet. b. Calculate...
2. On July 1, 2018, Dynamic Corporation purchased for cash 40% of the outstanding capital stock...
2. On July 1, 2018, Dynamic Corporation purchased for cash 40% of the outstanding capital stock of Cart Company. Dynamic has a fiscal year end of October 31st and Cart has a fiscal year end of March 31st. On October 31st, it has not yet been determined by Dynamic conclusively whether it has the ability to significantly influence Cart’s business operation. Cart Company’s stock is actively traded on the NASDAQ exchange reported its net income for the period ended October...
On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander...
On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander’s book value was $925,000, Plymouth assessed Sander’s total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock. The book values of Sander's individual assets and liabilities approximated their acquisition-date fair values except for the patent account, which was undervalued by $350,000. The...
On January 1, 2016, Alpha Corporation had 300,000 shares of common stock outstanding with a par...
On January 1, 2016, Alpha Corporation had 300,000 shares of common stock outstanding with a par value of $3 per share. On March 31, Alpha Corporation declared a 10% stock dividend when the market value was $8 per share. Use this information to prepare the General Journal entry (without explanation) for March 31. If no entry is required then write "No Entry Required."
PACE Corporation acquired all of the outstanding common stock of LINK Inc. on January 1, 2016...
PACE Corporation acquired all of the outstanding common stock of LINK Inc. on January 1, 2016 in exchange for for 20,000 shares of PACE Corp's $10 par value Common Stock that was trading at $50 a share on that date. LINK Inc.'s accounting records showed a net book value on that date of $600,000: Common Stock 200,000 Retained Earnings 400,000 Total Equity 600,000 Equipment on the LINK's books with a 5-year life was undervalued by $150,000. Any additional excess fair...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT