Question

In: Accounting

Superstar Limited purchased several investments during 2018. At 31 December 2018, the company had the following...

Superstar Limited purchased several investments during 2018. At 31 December 2018, the company had the following investments in ordinary share listed below. All investments are considered as available-for-sale:

Cost per share

Fair value per share

100,000 Sunshine Company shares

$12

$10

120,000 Orlando Company shares

$18

$25

On 1 May 2019, the company sold out half of Orlando shares at $28 each and paid $5,000 brokerage fee.

The company acquired 6% bonds from Fantastic Company on 1 October 2019 at $1,207,321. The face value of the bonds is $1,500,000. Semiannual interest is payable 31 March and 30 September. The market interest rate was 9% for bonds of similar risk and maturity. Management has the positive intent and ability to hold the bonds until maturity in 2029.

During 2019, the net income for Sunshine and Orlando were $200,000 and $500,000 respectively. Sunshine and Orlando declared and paid cash dividends of $1.2 and $0.8 each share on 31 December 2019.

The fair value of the investments on 31 December 2019 are shown as below:

Fair Value

Sunshine Company

$15 per hare

Orlando Company

$20 per share

6% bonds of Fantastic

Company

$1,226,000

Required:

  1. Prepare the journal entries to record the investments mentioned above for the year 2019.
  2. Assume Superstar has significant influence over the management of Sunshine Company (the investment represents 25% interest in the net assets of Sunshine), what is the reported amount of the investment shown on Superstar’s 2019 statement of financial position?

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Stonemusic purchased several investments during 2018. At 31 December 2018, the company had the following investment...
Stonemusic purchased several investments during 2018. At 31 December 2018, the company had the following investment in ordinary share below. The investment is considered as available-for-sale: 100,000 Starship shares Cost per share $12 Fair value per share $10 During 2019, the net income for Starship is $200,000. Starship declared and paid cash dividends of $1.2 each share on 31 December 2019. The fair value of the investments on 31 December 2019 is shown as below: Starship Company   Fair Value $15...
At December 31, 2018, Hull-Meyers Corp. had the followinginvestments that were purchased during 2018, its...
At December 31, 2018, Hull-Meyers Corp. had the following investments that were purchased during 2018, its first year of operations: Cost Fair Value Trading Securities: Security A $ 970,000 $ 984,000 Security B 175,000 169,800 Totals $ 1,145,000 $ 1,153,800 Securities Available-for-Sale: Security C $ 770,000 $ 843,000 Security D 970,000 987,800 Totals $ 1,740,000 $ 1,830,800 Securities to Be Held-to-Maturity: Security E $ 560,000 $ 571,400 Security F 685,000 679,600 Totals $ 1,245,000 $ 1,251,000 No investments were sold...
Shape Limited purchased a machine several years ago. On the 31st December 2017 The machine had...
Shape Limited purchased a machine several years ago. On the 31st December 2017 The machine had a Net Book Value of €140,000. A revaluation reserve of €10,000 existed in respect of the machine. Residual value of the asset is Nil. Useful life of the asset from 1 January 2018 is 5 years A new competitor has entered the market place and has been very disruptive in the industry which has prompted the company to carry out an impairment review at...
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several...
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period. Mergaronite Hill Revenues $(600,000) $(250,000) Cost of goods sold 280,000 100,000 Depreciation expense 120,000 50,000 Investment income Not given NA Retained earnings, 1/1/18 (900,000) (600,000) Dividends declared 130,000 40,000 Current assets 200,000 690,000 Land 300,000 90,000 Buildings (net) 500,000 140,000 Equipment (net) 200,000...
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several...
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period. Mergaronite Hill Revenues $ (602,000 ) $ (240,000 ) Cost of goods sold 260,000 114,000 Depreciation expense 120,000 44,000 Investment income NA NA Retained earnings, 1/1/18 (892,000 ) (602,000 ) Dividends declared 120,000 44,000 Current assets 200,000 662,000 Land 318,000 94,000 Buildings (net)...
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several...
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period. Mergaronite Hill Revenues $ (584,000 ) $ (248,000 ) Cost of goods sold 298,000 112,000 Depreciation expense 106,000 58,000 Investment income NA NA Retained earnings, 1/1/18 (896,000 ) (590,000 ) Dividends declared 134,000 44,000 Current assets 210,000 676,000 Land 316,000 84,000 Buildings (net)...
Marin Company had 214,800 shares of common stock outstanding on December 31, 2018. During the year...
Marin Company had 214,800 shares of common stock outstanding on December 31, 2018. During the year 2019, the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For the year 2019, Marin Company reported net income of $247,200 after a loss from discontinued operations of $43,300 (net of tax). What earnings per share data should be reported at the bottom of its income statement? (Round answers to 2 decimal places, e.g. $2.55.) Marin Company Income...
15.       The American Cancer Society had the following costs during the year ended December 31, 2018:...
15.       The American Cancer Society had the following costs during the year ended December 31, 2018: Fund-Raising $650,000 Administrative (Including 90,000 for data processing) 390,000 Research 130,000 What should the American Cancer Society report as program service expenses? Explain
Rozo company carries the following investments on its books at December 31, 2005, and December 31,...
Rozo company carries the following investments on its books at December 31, 2005, and December 31, 2006. All securities were purchased during 2005. Trading Securities: Company Cost Value December 31, 2005 Value December 31, 2006 A Company $25,000 $13,000 $20,000 B Company $13,000 $20,000 $20,000 C Company $35,000 $30,000 $25,000 Available for Sale Securities: Company Cost Value December 31, 2005 Value December 31, 2006 X Company $210,000 $130,000 $50,000 Y Company $50,000 $60,000 $70,000 A. Prepare the necessary journal entries...
Ruby Ruth Hospital had the following transactions during the year ended December 31, 2018. Prepare journal...
Ruby Ruth Hospital had the following transactions during the year ended December 31, 2018. Prepare journal entries to record these transactions, and state the amount that Ruby Ruth Hospital would report as patient service revenue in its operating statement. 1. The hospital provided services to patients insured by third-party payer A amounting to $5 million at its established billing rates. The hospital’s prospective billing arrangement with this third party stipulates payment to the hospital of 70 percent of its established...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT