Asked by Zerin Firoze on Jun 03, 2024
Verified
Information pertaining to long-term stock investments in 2017 by Bell Corporation follows:
Acquired 18% of the 250000 shares of common stock of Kansas Company at a total cost of $8 per share on January 1 2017. On July 1 Kansas Company declared and paid a cash dividend of $2 per share. On December 31 Kansas's reported net income was $654000 for the year.
Obtained significant influence over Toto Company by buying 30% of Toto's 100000 outstanding shares of common stock at a total cost of $22 per share on January 1 2017. On June 15 Toto Company declared and paid a cash dividend of $1.50 per share. On December 31 Toto's reported net income was $280000.
Instructions
Prepare all necessary journal entries for 2017 for Bell Corporation.
Significant Influence
The ability of a shareholder or an entity to shape the financial and operating policies of another company without having control over it.
Cash Dividend
A distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders in the form of cash.
Net Income
The total profit of a company after all expenses and taxes have been subtracted from total revenues, indicating the company's financial performance over a specific period.
- Comprehend the procedures associated with accounting and journal entries when acquiring equity and debt investments.
- Distinguish between the cost and equity methods used in investment accounting.
- Recognize how investment activities are presented in the income statement and balance sheet, along with their effects.
Verified Answer
Learning Objectives
- Comprehend the procedures associated with accounting and journal entries when acquiring equity and debt investments.
- Distinguish between the cost and equity methods used in investment accounting.
- Recognize how investment activities are presented in the income statement and balance sheet, along with their effects.
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