Question

In: Accounting

Corporation purchased 4,000 of the 400,000 outstanding shares of I-Water Company. Boom Beverage accounts for the...

Corporation purchased 4,000 of the 400,000 outstanding shares of I-Water Company. Boom Beverage accounts for the investment using the FAIR VALUE method.

On April 4, 2018, Corporation purchased 4,000 shares of Water Company common stock for $60 per share.
During 2018, Water Company’s net income was $1,200,000, and the company declared and paid a $1.00 per share cash dividend.
On December 31, 2018, Water Company stock was trading at $57 per share.
During 2019, Water Company’s net income was $1,400,000, and the company declared and paid a $1.20 per share cash dividend.
On December 31, 2019, Water Company stock was trading at $62 per share.
On October 19, 2020, Corporation sold its entire investment in Water Company for $65 per share.

Balance Sheet - Investments:

As of December 31, 2018: __________________

As of December 31, 2019: __________________

As of December 31, 2020: __________________

Income Statements - Investment Income/(Loss),net:

Year Ended December 31, 2018: __________________

Year Ended December 31, 2019: __________________

Year Ended December 31, 2020: __________________

Expert Solution

1) 31/12/2018- $228,000

2) 31/12/2019- $248,000

3) 31/12/2020- $0

Income Statements- Investment Income/(Loss) for the year ended:

1) 31/12/2018- $(8,000)

2) 31/12/2019- $24,800

3) 31/12/2020- $12,000

ekkarill92 answered 1 year ago

6. Moon Corporation (E&P of $700,000) has 4,000 shares of common stock outstanding. The shares are...

6. Moon Corporation (E&P of $700,000) has 4,000 shares of common stock outstanding. The shares are owned as follows: Andy 2,000 shares Darlene (Andy’s daughter) 1,500 shares Wendy (Andy’s aunt) 500 shares In the current year, Moon redeems all of Andy’s shares. Determine whether the redemption can qualify for sale or exchange treatment under the complete termination of a shareholder’s interest rules in each of the following independent circumstances. Assume that in a. – d Andy completes and submits the...

Filer Mining Corporation has eight million shares of common stock outstanding, 400,000 shares of 4 percent...

Filer Mining Corporation has eight million shares of common stock outstanding, 400,000 shares of 4 percent preferred stock outstanding, and 150,000 7 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $45 per share and has a beta of 0.90, the preferred stock currently sells for $70 per share, and the bonds have 15 years to maturity and sell for 90 percent of par. The market risk premium is 9 percent, the risk-free rate is...

11.) Melon Company has outstanding 400,000 shares of $10 par value ordinary shares. The company declares...

11.) Melon Company has outstanding 400,000 shares of $10 par value ordinary shares. The company declares a 5% shares dividend when the fair value of the shares is $65 per share. Prepare the journal entries for Melon Company for both the date of declaration and the date of distribution. 12.) Use the information from QUESTION 11, but assume Melon Company declared a 100% shares dividend rather than a 5% shares dividend. Prepare the journal entries for both the date of...

Green Day Corporation has outstanding 400,000 shares of $10 par value common stock.

Green Day Corporation has outstanding 400,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $65 per share. Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution.

9.On January 1, Year 4, Grant Corporation bought 4,000 (80%) of the outstanding common shares of...

9.On January 1, Year 4, Grant Corporation bought 4,000 (80%) of the outstanding common shares of Lee Company for $35,000 cash. Lee’s shares were trading for $7 per share on the date of acquisition. On that date, Lee had $12,500 of common shares outstanding and $15,000 retained earnings. Also on that date, the carrying amount of each of Lee’s identifiable assets and liabilities was equal to its fair value except for the following: Carrying Amount Fair Value Inventory $ 25,000...

Spicer Reports Corp has 400,000 shares of common stock outstanding, 200,000 shares of preferred stock outstanding,...

Spicer Reports Corp has 400,000 shares of common stock outstanding, 200,000 shares of preferred stock outstanding, and 40,000 bonds. If the common shares are selling for $25 per share, the preferred shares are selling for $12.50 per share, and the bonds are selling for 97 percent of par, what would be the weight used for common stock equity in the computation of Spicer's WACC? A. 18.59% B. 19.49% C. 24.37% D. 62.50% E. 79.75% Comfort Chair, Inc. has a $1.5...

Philip C. Company has 400,000 shares common stock outstanding. In addition, Philip also had 100,000 shares...

Philip C. Company has 400,000 shares common stock outstanding. In addition, Philip also had 100,000 shares of $100 par 5% convertible preferred stock. Each share of preferred stock can be converted into 2 shares of common stock. Net income for the year was $2,000,000 and the tax rate is 30%. Basic EPS ____________________ Fully-Diluted EPS __________________

Titan Mining Corporation has 9.6 million shares of common stock outstanding and 400,000 6 percent semiannual...

Titan Mining Corporation has 9.6 million shares of common stock outstanding and 400,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.3, and the bonds have 20 years to maturity and sell for 115 percent of par. The market risk premium is 8.4 percent, T-bills are yielding 4 percent, and the company’s tax rate is 40 percent. a. What is the firm's market value...

Pratt Company purchased 60% of the outstanding voting shares of Sandy Company at the beginning of...

Pratt Company purchased 60% of the outstanding voting shares of Sandy Company at the beginning of 2013 for $480,000. At the time of purchase, Sandy Company's total stockholders' equity amounted to $650,000. Income and dividend distributions for Sandy Company from 2013 through 2015 are as follows: 2013 2014 2015 Net income (loss) 70,000 80,000 -55,000 Dividend distribution -50,000 -40,000 -30,000 Cum. (income - dividends) 20,000 60,000 -25,000 Required: Prepare journal entries for Pratt Company from the date of purchase through...

On January 1 , 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of...

On January 1 , 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of Delta Crating Corp. for $250 million and accounts for this investment under the equity method. The following information is available regarding Delta Crating Corp. ($ in millions) Net identifiable assets at 1/1/2017 acquisition: Fair Value 700 Book Value 500 2017 Net Income 100 2017 Dividends declared and paid 30 2018 net income 80 2018 dividends declared and paid 20 12/31/2017 fair value (based on...