Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 15, Problem 15E
(a)
To determine
Journalize the stock investment transactions in the books of Company C.
(b)
To determine
Discuss the reporting of trading investments on the financial statements.
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The investments of Charger Inc. include a single investment: 18,440 shares of Raiders Inc. common stock purchased on February 24, Year 1, for $37 per share including brokerage commission. These shares were classified as trading securities. As of the December 31, Year 1, balance sheet date, the share price had increased to $45 per share.Required:A. Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.B. How is the unrealized gain or loss for trading investments reported on the financial statements?
The investments of Charger Inc. include a single investment: 18,440 shares of Raiders Inc. common stock purchased on February 24, Year 1, for $37 per share including brokerage commission. These shares were classified as trading securities. As of the December 31, Year 1, balance sheet date, the share price had increased to $45 per share.
Required:
A.
Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.
Prepare the journal entries for an investment accounted for under the equity method.
a. On January 2, 2017, Workowski Corporation purchased 55,000 shares (26%) of Wendy Company at a cost of $8 per share.
b. At the end of 2017, Wendy Company reported net income of $350,000 (Workowski’s share is 26%).
c. Wendy Company reported a $215,000 net loss for 2017. Workowski’s share of the loss is 26%.
d. In early 2018, Wendy Company paid a $75,000 dividend. Workowski’s share is 26%.
Chapter 15 Solutions
Financial Accounting
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