Phillips Company bought 40 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book
Question:
The balance in Phillips Companys investment account on December 31, 20X3, was $54,000.
Required
In each of the following independent cases, determine the amount that Phillips paid for its investment in Jones Bag stock assuming that Phillips accounted for its investment using the
(a) Cost method and
(b) Equitymethod.
Year 20X1 20X2 20X3 Net Income Dividends 8,000 12,000 20,000 $15,000 10,000 10,000
Step by Step Answer:
Balance at date of acquisition a Cost method 54000 2800 56...View the full answer
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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