Prepare the appropriate adjusting entries for Ivanhoe as of December 31, 2020, to reflect the application of the "fair value" rule for the securities described above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Fair Value Adjustment 20000 Unrealized Holding Gain or Loss - Income 20000
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- Brooks Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company's profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Brooks has had a policy of investing idle cash in equity securities. In particular, Brooks has made periodic investments in the company's principal vendor of mining equipment, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Brooks does not have significant influence over the operations of Norton Industries. Cheryl Thomas has recently joined Brooks as assistant controller, and her first assignment is to prepare the 2020 year-end adjusting entries for the accounts that are valued by the “fair value” rule for financial reporting purposes. Thomas has gathered the following…Ivanhoe Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company’s profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Ivanhoe has had a policy of investing idle cash in equity securities. In particular, Ivanhoe has made periodic investments in the company’s principal supplier, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Ivanhoe does not have significant influence over the operations of Norton Industries.Cheryl Thomas has recently joined Ivanhoe as assistant controller, and her first assignment is to prepare the 2020 year-end adjusting entries for the accounts that are valued by the “fair value” rule for financial reporting purposes. Thomas has gathered the following information about…McNeil Company, a medium-sized manufacturer of microwaveovens, has been an audit client for the past five years. McNeil Co. has been steadily growingand recently hired a new CEO who has decided to increase the level of investments infinancial instruments as a way of generating a profit from excess cash from operations.The new CEO has invested primarily in actively-traded equity securities, but has alsoinvested a portion of the cash in speculative derivative financial instruments. McNeilCo. is using a brokerage firm to execute trades, but the CEO is making the decision as towhich securities and derivatives to purchase and sell.In planning for the current year’s audit engagement, you note the following related to theinvestments in financial instruments:1. The CEO discusses the investment strategy with the board of directors, but theboard is not involved in the purchase and sale decisions and does not approvederivative contracts. The CEO enters into the speculative derivative…
- (Fair Value and Equity Methods) Brooks Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company’s profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Brooks has had a policy of investing idle cash in equity securities. In particular, Brooks has made periodic investments in the company’s principal supplier, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Brooks does not have significant influence over the operations of Norton Industries.Cheryl Thomas has recently joined Brooks as assistant controller, and her first assignment is to prepare the 2017 year-end adjusting entries for the accounts that are valued by the “fair value” rule for financial reporting purposes. Thomas has gathered the…Hanuman Corp is a medium-sized corporation that has long dominated their market. With a strong cash-flow position, they have decided to invest excess cash strategically. In particular, Hanuman made periodic investments with their main supplier, Shiva. Although Hanuman currently owns 18% of the common shares of Shiva, it does have significant influence over the operations of this investee company. Hanuman Corp has a December 31st year end. Before 2020, Hanuman had invested $22.4 million in Shiva and, at December 31, 2019, the investment had a fair value of $21.3 million. Hanuman did not sell or purchase any Shiva shares this year. Hanuman declared and paid a dividend totalling $2.2 million on all its common shares and reported 2020 net income of $13.6 million. Hanuman’s 18% ownership of Shiva has a December 31, 2020, fair value of $21,405,000. Required: Prepare the appropriate entries for the Shiva investment, for 202010/ Waterway Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company's profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Waterway has had a policy of investing idle cash in equity securities. In particular, Waterway has made periodic investments in the company's principal vendor of mining equipment, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Waterway does not have significant influence over the operations of Norton Industries. Cheryl Thomas has recently joined Waterway as assistant controller, and her first assignment is to prepare the December 31, 2025 year-end adjusting entries for the accounts that are valued by the "fair value" rule for financial reporting purposes. Thomas has…
- Hanley Limited manufactures products that capture solar energy. The company plans to list its shares on the Venture Exchange. To do so, it must meet all of the following initial listing requirements (among others): Net tangible assets must be at least $500,000. Pre-tax earnings must be $50,000. The company must have adequate working capital. Hanley has experienced significant growth in sales and is having difficulty estimating its bad debt expense. During the year, the sales team has been extending credit more aggressively in order to increase their commission compensation. Under the percentage-of-receivables approach using past percentages, the estimate is $50,000. Hanley has performed an aging and estimates the bad debts at $57,000. Finally, using a percentage of sales, the expense is estimated at $67,000. Before booking the allowance, net tangible assets are approximately $550,000. The controller decides to accrue $50,000, which results in pre-tax earnings of $60,000.…Asempa Private Company limited has made strides in business over the past 15 years. Management is deciding to penetrate other markets to increase the market share. However, the business requires more capital injection to enable it expand its business. The best option so far is for the company to go public, then only can the company issue financial instruments such as equity shares, preference shares, bonds and debentures etc. to raise additional capital. From the case above, examine the effect of the decision to go public On the financial position of the firm On ownership structure On management controlAsempa Private Company limited has made strides in business over the past 15 years. Management is deciding to penetrate other markets to increase the market share. However, the business requires more capital injection to enable it expand its business. The best option so far is for the company to go public, then only can the company issue financial instruments such as equity shares, preference shares, bonds and debentures etc. to raise additional capital. From the case above, examine the effect of the decision to go public i. on the financial position of the firm, ii. on ownership structure iii. on management control
- Asempa Private Company limited has made strides in business over the past 15 years. Management is deciding to penetrate other markets to increase the market share. However, the business requires more capital injection to enable it expand its business. The best option so far is for the company to go public, then only can the company issue financial instruments such as equity shares, preference shares, bonds and debentures etc. to raise additional capital.From the case above, examine the effect of issuing only equity shares on the financial position of the firm on ownership structure and on management controlAsempa Private Company limited has made strides in business over the past 15 years. Management is deciding to penetrate other markets to increase the market share. However, the business requires more capital injection to enable it expand its business. The best option so far is for the company to go public, then only can the company issue financial instruments such as equity shares, preference shares, bonds and debentures etc. to raise additional capital. From the case above, examine the effect of issuing only equity shares on management control?Asempa Private Company limited has made strides in business over the past 15 years. Management is deciding to penetrate other markets to increase the market share. However, the business requires more capital injection to enable it expand its business. The best option so far is for the company to go public, then only can the company issue financial instruments such as equity shares, preference shares, bonds and debentures etc. to raise additional capital. From the case above, examine the effect of issuing only equity shares on the financial position of the firm?