Assume X Corp creates a subsidiary, Y Corp, and invests $500,000 cash in exchange for all of the $1 par common stock (2,000 shares). What would journal entries X and Y make at the time of the investment?
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1.
- Assume X Corp creates a subsidiary, Y Corp, and invests $500,000 cash in exchange for all of the $1 par common stock (2,000 shares).
What would
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- 1. Assume X Corp creates a subsidiary, Y Corp, and invests $500,000 cash in exchange for all of the $1 par common stock (2,000 shares).)What would journal entries X and Y make at the time of the investment?Answer: 2. X Corporation created Y Corporation with a transfer of $1,000 cash. During Y Corp.’s first year of operations, it generated a net loss of $50 and paid no dividends. During Y Corp.’s second year of operations, it generated net income of $100 and paid cash dividends of $30. Required:A. Pass journal entries in the books of X corp. in year 1 and year 2 using equity method.B. What is the balance of investment account at the end of year 2 using equity method?C. Pass journal entries in the books of X corp. in year 1 and year 2 using cost Method.D. What is the balance of investment account at the end of year 2 using cost method?Answer: 3. X Corp. Acquired 100% of common stock of Y Corp. Paying $ 2 Million in return for 50 Thousand common stock with $ 1 par value. Y Corp.…6. To acquire Gaines Corporation stock, Palmer Co. pays $61,500 in cash. What entry should be made for this investment, assuming the stock is readily marketable?Consider the following premerger information about Firm X and Firm Y: 222 Total earnings Shares outstanding Per-share values: Market Book Firm X $92,000 49,000 Assets from X Assets from Y Goodwill Total Assets XY LA GA Firm Y $20,500 14,000 49 $ 18 $ 20 7 zursurch of M www.am entrat human pa grawe anakmuom 2 Hoe o Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $7 per share, and that neither firm has any debt before or after the merger. Construct the postmerger balance sheet for Firm X assuming the use of the purchase accounting method. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
- Jacobson Company is considering an investment in the common stock of Biltrite Company. What are the accounting issues surrounding the recording of income in future periods if Jacobson purchases: a. 15% of Biltrite’s outstanding shares. b. 40% of Biltrite’s outstanding shares. c. 100% of Biltrite’s outstanding shares. d. 80% of Biltrite’s outstanding shares.Item No. 8 is based on the following information: sid 000,001 9 Whistleblow, Inc. issued 500 ordinary shares with a par value of P 24 per share to a lawyer for the latter's legal services. The shares were in payment for the 100 hours rendered by the lawyer who billed the company P 160 per hour. On the date of share issuance, the shares were trading in the stock exchange at P 32 per share. 1 000.00ESPAÑOL INGLÉS FRANCÉS ABC Corporation has an investment of 4,000,000 shares in XYZ Corporation. On December 31, 2021, ABC distributes, to its shareholders, the shares of XYZ in the form of a dividend. This dividend must be recorded in ABC's books for to. the market value of XYZ stock. b. the market value of ABC shares. С. the book value of XYZ stock. Enviar come MacBook Air
- Identify which category of shareholders’ equity is affected by each item and briefly explain how it is affected. 91. Donation of a plant site to the company.92. 92. Purchased treasury share (cost method).93. 93. Declaration of cash dividend payable next period.94. 94. Unrealized loss on investment in securities available for sale.95. 95. Sale of additional ordinary shares of the corporation.96. 96. Sold the company’s ordinary shares on credit.97. 97. Corrected an accounting error (expense) from a prior period.98. 98. Restricted retained earnings by making an entry equal to the cost of treasury share purchased.99. 99. Exchanged the corporation’s ordinary shares for land.100. 100. Investor tendered their convertible preferred share for the ordinary shares of the corporation.a.Draw a picture illustrating the following fact pattern involving trust-preferred securities. Bank Z sets up a trust (a subsidiary entity) and owns 100% of the common stock in the trust. That trust issues preferred securities to investors (in exchange for cash) and the investors earn periodic fixed dividend payments on their preferred shares. Using the funds from the sale of preferred stock, the trust purchases junior subordinated debt from Bank Z and this debt pays periodic fixed interest payments equal to the dividend payments made by the trust. The trust has a call option, allowing it to call back the preferred shares from investors at its option. Additionally, Bank Z has a call option allowing it to call back its debt from the trust at its option. Bank Z guarantees to the trust’s investors that the trust will use its available cash to make interest payments.1. These dividends are payable in promissory notes and will be paid at some future date. Choices; property dividends scrip dividends cash dividends liquidating dividends 2. To record the foregoing transaction Choices; Ordinary Treasury Shares would be credited for P 30,000 Ordinary Treasury Share Premium would be credited for P 30,000 Ordinary Treasury Share Premium would be credited for P 10,000 Ordinary Share Capital would be credited for P 20,000.
- Carlin Enterprises purchased 2,000 shares of the 2,000,000 common shares outstanding in Captain Inc. Carlin intends to hold on to this investme for the foreseeable future. How should this investment be classified on the books of Carlin? O trading equity investment O held-to-maturity debt investment O held-to-maturity equity investment O available-for-sale equity investment Question 23 Held-to-maturity securities O affects other comprehensive income and appear as financing activities on the statement of cash flows. are never disclosed in the notes to financial statementsThe following information relates to Midas Ltd, a small but successful investment holdingcompany.(i) In April 2021, Midas Ltd purchased 100,000 £1.00 listed equity shares at a price of £5.00per share. Transactions costs were £5,000. At 31 December 2021, these shares weretrading at £5.30 per share. A dividend of £0.05 per share was received on 30 September2022.(ii) Midas Ltd also has an investment in a five-year bond which was purchased four yearsago.At 31 December 2021, the bond was valued at an amortised cost of £500,000 with a statedand effective interest rate of 8% (current market rates are 10%).This bond will be maturing on 31 December 2022 and Midas Ltd is expecting to receive only80% the principal but not the interest for the last year. Required(a) Show the figures relating to this investment to be included in Midas Ltd's financialstatements at 31 December 2021 on the basis that:(i) The shares were bought for trading(ii) The shares were bought as a source of dividend income and…Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Shares outstanding Price per share Firm B Firm T 6,200 1,400 $ 48 $ 18 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,600. Firm T can be acquired for $20 per share in cash or by exchange of stock wherein B offers one of its shares for every two of T's shares. Are the shareholders of Firm T better off with the cash offer or the stock offer? Cash offer is better Share offer is better At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Exchange ratio to 1