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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
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