On January 1, 2016, Arch Ltd. purchased 30% of the common shares of AP Inc. for $1,700,000.
Question:
On January 1, 2016, Arch Ltd. purchased 30% of the common shares of AP Inc. for $1,700,000. In 2016, AP reported net income of $880,000 and paid dividends of $600,000.
Required:
a. Which of the following conditions must be met for Arch to use the equity method to report its investment in AP?
i. Arch owns at least 20% of the voting shares of AP.
ii. Arch has control over AP.
iii. Arch has a significant interest in AP.
iv. Arch is able to exercise significant influence over AP.
b. How much income would be reported by Arch in 2016 for its investment in AP under the equity method?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (13 reviews)
a The best answer is iv The criterion for using the equity method ...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
4.40+
65+ Reviews
86+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
On January 1, 2014, Pennington Corporation purchased 30% of the common shares of Edwards Company for $180,000. During the year, Edwards earned net income of $80,000 and paid dividends of $20,000....
-
Shari Patel of the controller's office of Diamond Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ended December 31, 2017. Patel has...
-
At January 1, 2015, Computer Metals Processing Ltd.'s balance sheet reported the following shareholders' equity: Shareholders' Equity Contributed capital: Preferred shares, $1.25, cumulative (2 years...
-
Sketch the following regions and write an iterated integral of a continuous function f over the region. Use the order dy dx. R = {(x, y): 0 x 4, x y 8x}
-
If the apex angle of a prism is (see Fig. 23-63), what is the minimum incident angle for a ray if it is to emerge from the opposite side (i.e., not be totally internally reflected), given n = 1.58?...
-
Friendly Bank is in the process of implementing an activity-based costing system. A copy of an interview with the manager of Friendlys credit card department follows:. Question 1: How many employees...
-
Determine the slope at \(A\) of the overhang white spruce beam. A a 400 lb -8 ft La 3 in. H 16 in. Section a-a B -4 ft. 400 lb-ft
-
Reebok International Ltd. is a global company that designs and markets sports and fitness products, including footwear, apparel, and accessories. Some of the items included in its recent annual...
-
Assume you are a staff associate with GKN Associates assigned to the Mystery, Inc. engagement. John Cole, the senior associate on the job, has asked for your assistance in performing journal entry...
-
Husband, Jaylen has 128k of life insurance and Wife, Avery has 50k of life insurance. ESTATE PLANNING INFORMATION Wills were last completed five years ago. They live in a common-law state. Jaylens...
-
Refer to the facts set out in P7-13 above and consider the following additional information: a. On July 1, 2018, ICI received a $43,750 interest payment on the Zoe Corp. bonds. The next interest...
-
On January 1, 2017, Sunshine Ltd. acquired 30% of the outstanding ordinary shares of Moonbeam Inc. for $270,000 and now has significant influence over the investee. The fair value of Moonbeams net...
-
Identity each of the following compounds as a carboxylic acid, ester, ketone, aldehyde, or amine, a. anthraquinone, an important starting material in the manufacture of dyes: b. c. d. CH HO-C-CH CHCH,
-
Given the following method signature, which classes can call it? void run(String government) A. Classes in other packages B. Classes in the same package C. Subclasses in a different package D. All...
-
Fill in the blanks: It is possible to extend a(n) ______________ but not a(n) ______________. (Choose two.) A. interface, abstract class B. anonymous class, static nested class C. abstract class,...
-
What is the output of the Turnip class? A. 3 B. 5 C. The code does not compile. D. The code compiles but throws an exception at runtime. E. None of the above. package animal; interface GameItem { int...
-
What is the minimum number of lines that need to be removed to make this code compile? A. 1. B. 2. C. 3. D. 4. E. The code compiles as is. @FunctionalInterface public interface Play { public static...
-
Which of the following statements about overriding a method are correct? (Choose three.) A. The return types must be covariant. B. The access modifier of the method in the child class must be the...
-
The adjusted trial balance for Carter Bowling Alley at December 31, 2020, contains the following accounts. Instructions a. Prepare a classified balance sheet; assume that $30,000 of the note payable...
-
Why are stocks usually more risky than bonds?
-
Refer to the 2016 financial statements for Canadian Tire Corporation in Appendix C. Required: a. What was the amount of equity reported in Canadian Tires financial statements as at December 31, 2016?...
-
Cardiff Corporation is a public company traded on a major exchange. Cardiff s common shares are currently trading at $20 per share. The board of directors is debating whether to issue a 25% stock...
-
Cambridge Corp. has a single class of shares. As at its year ended December 31, 2021, the company had 2,500,000 shares issued and outstanding. On the stock exchange, these shares were trading at...
-
American Blossom management is planning to make a $3.7 million loan to a French firm. Currently, LIBOR is at 0.55 percent. American management considers a default risk premium of 1.10 percent, a...
-
The following account balances are for Ping Chung, Certified Public Accountant, as of April 30, 20X1. Cash Accounts receivable $120,000 48,000 Maintenance expense 21,400 Advertising expense 17,060...
-
Abbott Equipment leased a protein analyzer to Werner Chemical, Inc., on September 30, 2021. Abbott purchased the machine from NutraLabs, Inc., at a cost of $5 million. The five-year lease agreement...
Study smarter with the SolutionInn App