Question

In: Accounting

Farms inc. owns 4% of common shares of XYZ. co. at the beginning of the current...

Farms inc. owns 4% of common shares of XYZ. co. at the beginning of the current year the fair value of an investment in XYZ was $250,000. At the end of the year, the fair value had decreased to $245,000.

What journal entry would Farms inc. record to adjust the investment of the fair value?

Solutions

Expert Solution

Notes: 1 Calculation of Gain or Loss on Investment
Market Value at the year End $                 2,45,000
Less: Investment value $                 2,50,000
Unrealized Loss on investment $                     -5,000
Solution:
Journal entry of the same is passed as below,
Date Account Title and explanation Debit Credit
----- Unrealized Loss on investment $                       5,000
        Investment $                        5,000

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Q5) ( 5 MARKS ) A FIRM PURCHASED( INVESTED IN ) COMMON SHARES OF XYZ CO....
Q5) ( 5 MARKS ) A FIRM PURCHASED( INVESTED IN ) COMMON SHARES OF XYZ CO. WITH FOLLOWING DETAILS NO OF COMMON SHARES BOUGHT 2000 BUYNIG PRICE $40 BROKERAGE CHARGES FOR ALL THE SHARES $200 JOURNALIZE THE FOLLOWING TRANSACTIONS A JOURNALIZE PURCHASE OF INVESTMENT STOCKS AND CALCULATE COST PER SHARE B CALCULATE COST PER SHARE C EARNED $ 3 PER SHARE AS DIVIDEND INCOME (JOURNALIZE ENTRY) D THE FIRM SOLD SHARES TO ABC CO. WITH THE FOLLOWING DETAILS NO OF...
On January 1, 2020, ABC Co. paid $800,000 to acquire common shares of XYZ Co., which...
On January 1, 2020, ABC Co. paid $800,000 to acquire common shares of XYZ Co., which represented 30% of XYZ Co.’s shares outstanding. The value of XYZ’s net assets was $1,850,000 on that date. The excess of the purchase price over ABC’s share of XYZ’s net assets is attributed to unrecorded intangibles with a 20-year life. XYZ earned net income and comprehensive income of $400,000 in 2020 and paid dividends of $80,000. The investment in XYZ had a fair value...
Common text for questions 3 and 4: An investor buys three shares of XYZ at the...
Common text for questions 3 and 4: An investor buys three shares of XYZ at the beginning of 2002 for $100 apiece. After one year, the share price has increased to $110 and he receives a dividend per share of $4. Right after receiving the dividend, he buys two additional shares at $110. After another year, the share price has dropped to $90, but the investor still receives a dividend per share of $4. Right after receiving the dividend, he...
On January 4, of the Current Year Berta Inc. reacquired 5,000 shares of its common stock...
On January 4, of the Current Year Berta Inc. reacquired 5,000 shares of its common stock at $100 per share. On May 17 Berta Sold 4,000 of the reaquired shares at $120 per share. The remaining 1,000 shares were sold at $98 per share on December 15. REQUIRED: 1. Journalize the transaction of January 4, and December 15. 2.What is the balance in Paid-in Capital from sale of treasury stock on December 31, of the current year? 3. Why might...
Shamrock, Inc. owns 25% of the common shares of Whispering Winds Corp. The other 75% of...
Shamrock, Inc. owns 25% of the common shares of Whispering Winds Corp. The other 75% of the shares are owned by the Sheffield family. Shamrock acquired the shares eight years ago through a financing transaction. Each year, Shamrock has received a dividend from Sheffield. Sheffield has been in business for 60 years and continues to have strong operations and cash flows. Shamrock must determine the fair value of this investment at its year end. Since there is no market on...
Apple Corporation owns 60,000 shares of common stock out of the 100,000 shares outstanding of common...
Apple Corporation owns 60,000 shares of common stock out of the 100,000 shares outstanding of common stock of Orange Corporation. On 1/1/2012, using the equity method, Apple recorded its investment in Orange on its book at $480,000. The book value of net assets of Orange Corporation on 1/1/2012 was $800,000. If on 1/2/2012 Orange Corporation repurchased 20,000 shares from outsiders at $6 a share, what adjustment would be needed for Apple’s “Investment in Orange” account after the repurchase? $30,000 increase...
Question 1 Splish Brothers Inc. owns 25% of the common shares of Culver Corporation The other...
Question 1 Splish Brothers Inc. owns 25% of the common shares of Culver Corporation The other 75% of the shares are owned by the Culver family. Splish Brothers acquired the shares eight years ago through a financing transaction. Each year, Splish Brothers has received a dividend from Culver. Culver has been in business for 60 years and continues to have strong operations and cash flows. Splish Brothers must determine the fair value of this investment at its year end. Since...
Porter Corporation owns all 34,000 shares of the common stock of Street, Inc. Porter has 73,000...
Porter Corporation owns all 34,000 shares of the common stock of Street, Inc. Porter has 73,000 shares of its own common stock outstanding. During the current year, Porter earns net income (without any consideration of its investment in Street) of $290,000 while Street reports $236,000. Annual amortization of $15,000 is recognized each year on the consolidation worksheet based on acquisition-date fair-value allocations. Both companies have convertible bonds outstanding. During the current year, bond-related interest expense (net of taxes) is $57,000...
Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has 70,000...
Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has 70,000 shares of its own common stock outstanding. During the current year, Porter earns net income (without any consideration of its investment in Street) of $243,000 while Street reports $170,000. Annual amortization of $14,000 is recognized each year on the consolidation worksheet based on acquisition-date fair-value allocations. Both companies have convertible bonds outstanding. During the current year, bond-related interest expense (net of taxes) is $44,000...
Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has 70,000...
Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has 70,000 shares of its own common stock outstanding. During the current year, Porter earns net income (without any consideration of its investment in Street) of $243,000 while Street reports $170,000. Annual amortization of $14,000 is recognized each year on the consolidation worksheet based on acquisition-date fair-value allocations. Both companies have convertible bonds outstanding. During the current year, bond-related interest expense (net of taxes) is $44,000...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT