Entries for equity investments: 20%-50% ownership At a total cost of $1,162,500, Herrera Corporation acquired 75,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 300,000 shares of common stock outstanding, including the shares cquired by Herrera Corporation. 1. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $2,090,000 for the current period. 2. A cash dividend of $1.00 per common share is paid by Tran Corp. during the current period. b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor exercise significant influence over the investee.

Entries for equity investments: 20%-50% ownership At a total cost of $1,162,500, Herrera Corporation acquired 75,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 300,000 shares of common stock outstanding, including the shares cquired by Herrera Corporation. 1. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $2,090,000 for the current period. 2. A cash dividend of $1.00 per common share is paid by Tran Corp. during the current period. b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor exercise significant influence over the investee.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter14: Intercorporate Investments In Common Stock

Section: Chapter Questions

Problem 18E

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Entries for equity investments: 20%-50% ownership At a total cost of $761,600, Herrera Corporation acquired 56,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 200,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $1,370,000 for the current period. 2. A cash dividend of $1.30 per common share is paid by Tran Corp. during the current period. 88 b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor exercise significant influence over the investee.
Entries for equity investments: 20%-50% ownership At a total cost of $1,104,000, Herrera Corporation acquired 96,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 300,000 shares of common stock outstanding, Induding the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $1,990,000 for the current period. 88 2. A cash dividend of $1.10 per common share is paid by Tran Corp. during the current period. b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor exercise significant influence over the investee.
Instructions At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. B. Why is the equity method appropriate for the Tran Corp. investment?
At a total cost of $1,251,600, Herrera Corporation acquired 84,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 300,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. Question Content Area 1. Tran Corp. reports net income of $2,250,000 for the current period. blank - Select - - Select - - Select - - Select - Question Content Area 2. A cash dividend of $1.60 per common share is paid by Tran Corp. during the current period. blank - Select - - Select - - Select - - Select - Question Content Area b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is…
Entries for equity investments: 20%-50% ownership At a total cost of $2,520,000, Herrera Corporation acquired 144,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 400,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $4,540,000 for the current period. 2. A cash dividend of $1.70 per common share is paid by Tran Corp. during the current period. b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount over the investee. of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor exercise significant influence
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