Analyzing Equity Method Investment Footnotes Merck & Co., Inc. reports a December 31, 2016 balance of...

Analyzing Equity Method Investment Footnotes
Merck & Co., Inc. reports a December 31, 2016 balance of $726 million in "Investments in affiliates accounted for using the equity method" ("Investments in affiliates").

Provide the entries for the following events for fiscal year 2017:

a. Merck's share of income from its affiliates was $53 million.

b. Merck received dividends and distributions from its affiliates of $4 million during fiscal year 2017.

Note: Enter answers in millions.

Ref.	Description	Debit	Credit
a.	AnswerCashDividend incomeGoodwillIncome from affiliatesInterest receivableInvestment in affiliatesRealized gainRealized lossRetained earningsUnrealized gain - AOCIUnrealized loss - AOCI	Answer	Answer
	AnswerCashDividend incomeGoodwillIncome from affiliatesInterest receivableInvestment in affiliatesRealized gainRealized lossRetained earningsUnrealized gain - AOCIUnrealized loss - AOCI	Answer	Answer
b.	AnswerCashDividend incomeGoodwillIncome from affiliatesInterest receivableInvestment in affiliatesRealized gainRealized lossRetained earningsUnrealized gain - AOCIUnrealized loss - AOCI	Answer	Answer
	AnswerCashDividend incomeGoodwillIncome from affiliatesInterest receivableInvestment in affiliatesRealized gainRealized lossRetained earningsUnrealized gain - AOCIUnrealized loss - AOCI	Answer	Answer

c. After these events, what should be the balance in Merck’s investments in affiliates account at December 31, 2017?
$Answer million

Solutions

Expert Solution


Ref.	Description	Debit	Credit
a.	Investment in affiliates	53 million
	Income from affiliates		53 million

b.	Cash	4 million
	Investment in affiliates		4 million

c	Calculation of Merck's investment in affiliates at the end of the year

	Balance as on 31 Dec 2016	726.0	million
	Add: Income from affiliated during 2017	53.0	million
	Less: Dividend received during 2017	(4.0)	million
	Balance as on 31 Dec 2017	775.0	million

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016: Common stock—$20 par value, 100,000 shares authorized,50,000 shares issued and outstanding $ 1,000,000 Paid-in capital in excess of par value, common stock 80,000 Retained earnings 430,000 Total stockholders' equity $ 1,510,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 4,500 shares of its own stock at $20 cash per share. Jan. 5 ...

Larkspur Inc. had the following balance sheet at December 31, 2016. LARKSPUR INC. BALANCE SHEET DECEMBER...

Larkspur Inc. had the following balance sheet at December 31, 2016. LARKSPUR INC. BALANCE SHEET DECEMBER 31, 2016 Cash $ 20,990 Accounts payable $ 30,990 Accounts receivable 22,190 Notes payable (long-term) 41,990 Investments 32,990 Common stock 100,990 Plant assets (net) 81,000 Retained earnings 24,190 Land 40,990 $ 198,160 $ 198,160 During 2017, the following occurred. 1. Larkspur Inc. sold part of its investment portfolio for $ 15,071. This transaction resulted in a gain of $ 3,471 for the firm. The...

Lander Inc. had the following balance sheet on December 31, 2016: LANDER, INC. Balance Sheet December...

Lander Inc. had the following balance sheet on December 31, 2016: LANDER, INC. Balance Sheet December 31, 2016 Cash $49,830 Accounts payable $37,180 Accounts receivable $20,790 Bonds payable $38,500 Investments $27,500 Common stock $209,000 Plant assets (net) $85,800 Retained earnings $20,240 Land $121,000 Total Assets $304,920 Total Liabilities & Equity $304,920 During 2017 the following occurred: Lander liquidated its investment portfolio at a loss of $7,150. A tract of land was purchased for $34,100. An additional $22,000 in common stock...

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows:...

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows: 1 Dec. 31, 2016 Dec. 31, 2015 2 Assets 3 Cash $918,420.00 $965,310.00 4 Accounts receivable (net) 828,210.00 762,450.00 5 Inventories 1,268,100.00 1,162,260.00 6 Prepaid expenses 29,220.00 35,270.00 7 Land 315,170.00 479,410.00 8 Buildings 1,463,110.00 901,510.00 9 Accumulated depreciation-buildings (409,500.00) (383,260.00) 10 Equipment 512,060.00 454,500.00 11 Accumulated depreciation-equipment (141,780.00) (159,530.00) 12 Total assets $4,783,010.00 $4,217,920.00 13 Liabilities and Stockholders’ Equity 14 Accounts payable (merchandise...

The comparative balance sheet of Merrick Equipment Co. for December 31, 2016 and 2015, is as...

The comparative balance sheet of Merrick Equipment Co. for December 31, 2016 and 2015, is as follows: 1 Dec. 31, 2016 Dec. 31, 2015 2 Assets 3 Cash $70,720.00 $47,940.00 4 Accounts receivable (net) 207,230.00 188,190.00 5 Inventories 298,520.00 289,850.00 6 Investments 0.00 102,000.00 7 Land 295,800.00 0.00 8 Equipment 438,600.00 358,020.00 9 Accumulated depreciation-equipment (99,110.00) (84,320.00) 10 Total assets $1,211,760.00 $901,680.00 11 Liabilities and Stockholders’ Equity 12 Accounts payable (merchandise creditors) $205,700.00 $194,140.00 13 Accrued expenses payable (operating expenses)...

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows:...

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows: 1 Dec. 31, 2016 Dec. 31, 2015 2 Assets 3 Cash $917,690.00 $964,930.00 4 Accounts receivable (net) ?828,620.00 762,860.00 5 Inventories 1,267,970.00 1,162,780.00 6 Prepaid expenses 29,050.00 36,010.00 7 Land 315,250.00 480,690.00 8 Buildings 1,462,990.00 901,470.00 9 Accumulated depreciation-buildings (409,170.00) (382,690.00) 10 Equipment 511,480.00 453,680.00 11 Accumulated depreciation-equipment (142,100.00) (159,400.00) 12 Total assets $4,781,780.00 $4,220,330.00 13 Liabilities and Stockholders’ Equity 14 Accounts payable (merchandise...

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows:...

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows: 1 Dec. 31, 2016 Dec. 31, 2015 2 Assets 3 Cash $918,260.00 $965,110.00 4 Accounts receivable (net) 828,050.00 761,830.00 5 Inventories 1,268,550.00 1,163,510.00 6 Prepaid expenses 28,760.00 35,720.00 7 Land 315,810.00 479,900.00 8 Buildings 1,463,300.00 900,740.00 9 Accumulated depreciation-buildings (408,350.00) (381,910.00) 10 Equipment 512,470.00 454,060.00 11 Accumulated depreciation-equipment (142,270.00) (159,730.00) 12 Total assets $4,784,580.00 $4,219,230.00 13 Liabilities and Stockholders’ Equity 14 Accounts payable (merchandise...

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows:1Dec....

The comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows:1Dec. 31, 2016Dec. 31, 2015 2 Assets 3 Cash $918,790.00 $964,070.00 4 Accounts receivable (net) 828,170.00 761,040.00 5 Inventories 1,268,620.00 1,163,480.00 6 Prepaid expenses 29,330.00 34,930.00 7 Land 316,340.00 480,430.00 Buildings 1,461,710.00 900,600.00 9 Accumulated depreciation-buildings (408,700.00) (382,020.00) 10 Equipment 511,330.00 455,280.00 11 Accumulated depreciation-equipment (140,790.00) (158,240.00) 12 Total assets $4,784,800.00 $4,219,570.00 13 Liabilities and Stockholders’ Equity 14 Accounts payable (merchandise creditors) $922,480.00 $959,030.00 15...

The equity sections from Hovo Corporation’s 2016 and 2017 balance sheets follow. Stockholders’ Equity (December 31,...

The equity sections from Hovo Corporation’s 2016 and 2017 balance sheets follow. Stockholders’ Equity (December 31, 2016) Common stock—$20 par value, 30,000 shares authorized, 17,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $340,000 Paid-in capital in excess of par value, common stock . . . . . . . . . . ....

The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as...

The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows: 1 Dec. 31, 2016 Dec. 31, 2015 2 Assets 3 Cash $625,680.00 $586,230.00 4 Accounts receivable (net) 228,100.00 208,850.00 5 Inventories 640,910.00 617,650.00 6 Investments 0.00 240,620.00 7 Land 328,090.00 0.00 8 Equipment 704,540.00 553,320.00 9 Accumulated depreciation-equipment (166,310.00) (147,840.00) 10 Total assets $2,361,010.00 $2,058,830.00 11 Liabilities and Stockholders’ Equity 12 Accounts payable (merchandise creditors) $425,280.00 $404,550.00 13 Accrued expenses payable (operating expenses)...

Subjects