Question
In: Accounting
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 agoRelated Solutions
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Common stock
$209,000
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Accounts receivable (net)
828,210.00
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5
Inventories
1,268,100.00
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29,220.00
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315,170.00
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1,463,110.00
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Accumulated depreciation-buildings
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512,060.00
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Accumulated depreciation-equipment
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Accounts receivable (net)
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Inventories
298,520.00
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Investments
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295,800.00
0.00
8
Equipment
438,600.00
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Dec. 31, 2015
2
Assets
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Cash
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Inventories
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Prepaid expenses
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315,250.00
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8
Buildings
1,462,990.00
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9
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Equipment
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Assets
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Cash
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4
Accounts receivable (net)
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761,830.00
5
Inventories
1,268,550.00
1,163,510.00
6
Prepaid expenses
28,760.00
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315,810.00
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Buildings
1,463,300.00
900,740.00
9
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Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
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Accounts receivable (net)
228,100.00
208,850.00
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Inventories
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617,650.00
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Investments
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Equipment
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553,320.00
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