Question

Bon Company owns 40 percent of the voting stock of Kiev Company. The investment account for this company on Bon’s balance sheet had a balance of $300,000 on January 1, 2011. During 2011, Kiev reported the following quarterly earnings and dividends paid:


Bon exercises a significant influence over Kiev’s operations and therefore uses the equity method to account for its investment.

REQUIRED
1. Prepare a T account for Bon’s investment in Kiev. Enter the beginning balance, the transactions entries for the year in total, and the ending balance.
2. What is the effect and placement of the transactions in 1 on Bon’s earnings as reported on the income statement?
3. What is the effect and placement of the transactions in 1 on the statement of cash flows?
4. How would the effects on the statements differ if Bon’s ownership represented only a 10 percent share ofKiev?


$1.99
Sales0
Views102
Comments0
  • CreatedSeptember 10, 2014
  • Files Included
Post your question
5000