Ahmed Corporation purchased 75 percent of Gander Company's common shares and 40 percent of its preferred...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Ahmed Corporation purchased 75 percent of Gander Company's common shares and 40 percent of its preferred shares on January 1, Year 6, for $540,000 and $160,000, respectively. At the time of purchase, the fair value of Gander's common and preferred shares was equal to their carrying value. Gander's balance sheet contained the following balances: Preferred Shares ($10 par value) Common Shares Retained Earnings Total Shareholders' Equity $ 400,000 300,000 420,000 $ 1,120,000 For the year ended December 31, Year 6, Gander reported net income of $140,000 and paid dividends of $52,000 (which includes the preferred dividend). The preferred shares are cumulative and pay an annual dividend of 4 percent. There were no dividends in arrears at the date of acquisition. Ahmed uses the cost method to account for its interest in the preferred shares of Gander and the equity method to account for its interest in the common shares of Gander. Required: (a) Prepare the journal entries recorded by Ahmed for its investments in Gander during Year 6. (If transaction/event, select "No journal entry required" in the first account field.) View transaction list A Record the purchase of Gander shares. B Record the dividends on preferred shares from Gander. с Record the equity-method income. D Record the dividends from Gander. EX: (b) Calculate non-controlling interest's share of net income and non-controlling interest on the balance sheet for the Year 6 consolidated financial statements. (Omit $ sign in your response.) Non-controlling interest's share of net income Non-controlling interest on the balance sheet 69 69 Ahmed Corporation purchased 75 percent of Gander Company's common shares and 40 percent of its preferred shares on January 1, Year 6, for $540,000 and $160,000, respectively. At the time of purchase, the fair value of Gander's common and preferred shares was equal to their carrying value. Gander's balance sheet contained the following balances: Preferred Shares ($10 par value) Common Shares Retained Earnings Total Shareholders' Equity $ 400,000 300,000 420,000 $ 1,120,000 For the year ended December 31, Year 6, Gander reported net income of $140,000 and paid dividends of $52,000 (which includes the preferred dividend). The preferred shares are cumulative and pay an annual dividend of 4 percent. There were no dividends in arrears at the date of acquisition. Ahmed uses the cost method to account for its interest in the preferred shares of Gander and the equity method to account for its interest in the common shares of Gander. Required: (a) Prepare the journal entries recorded by Ahmed for its investments in Gander during Year 6. (If transaction/event, select "No journal entry required" in the first account field.) View transaction list A Record the purchase of Gander shares. B Record the dividends on preferred shares from Gander. с Record the equity-method income. D Record the dividends from Gander. EX: (b) Calculate non-controlling interest's share of net income and non-controlling interest on the balance sheet for the Year 6 consolidated financial statements. (Omit $ sign in your response.) Non-controlling interest's share of net income Non-controlling interest on the balance sheet 69 69
Expert Answer:
Answer rating: 100% (QA)
C Investment in Gander Common Shares 93000 Income from Gander Co 93000 B Non... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
Students also viewed these accounting questions
-
On January 1, 20X5, Pond Corporation purchased 75 percent of Skate Companys stock at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of...
-
On January 1, 20X5, Pond Corporation purchased 75 percent of Skate Companys stock at underlying book value. At that date, the fair value of the noncontrolling interest was aJanuary 1, 20X8, and...
-
Pea Corporation purchased 75 percent of the outstanding voting stock of Sen Corporation for $2,400,000 on January 1, 2011. Sen's stockholders' equity on this date consisted of the following (in...
-
Jacks Tracks sells 24,000 custom-designed GoKarts per year. These GoKarts are sold evenly throughout the year. The manufacturer charges Jack a $50 processing cost per order, and Jack incurs a...
-
Determine the age of ancient wooden items if it is known that the specific activity of C14 nuclide in them amounts to 3/5 of that in lately felled trees. The half-life of C14 nuclei is 5570 years.
-
Find u · v. 2 ,v = | 3 u 2. 3.
-
Venezuelan Bolivar (B). The Venezuelan political and economic crisis deepened in late 2002 and early 2003. On January 1, 2003, the bolivar was trading at Bs1400/$. By February 1, its value had fallen...
-
Revenue recognition at and after time of sale. Assume that during December 2008, Nordstrom sold $20 million of merchandise and another $12 million of gift cards, of which $24 million was on credit...
-
The assigning of access and authority for a specific user ID is called a ________. 1) User profile 2) User access account 3) User account 4) Profile of access Which of the following is NOT a...
-
Solve this in python. **[70 pts]** You will be writing code for recording the menuitems and daily sales of a lemonade stand. It will have theseclasses: MenuItem, SalesForDay, and LemonadeStand. All...
-
Solve the following game by suitable technique to find out value of game: Plaer A 15 12 16 17 Player B 5 4 2 10 3 5 3 4 SECTION 10 11 14 12 (10)
-
3. Modify the model of the client-server system shown below such that the call may terminate with a timeout action rather than a response from the server. Provide an FSP description for each of the...
-
Define each of the line items as per their respective categories and costs of TOC, ABC, TQC : (I) Plant Security (II) Producing parts for certain specifications (III) Indirect Consumables (IV)...
-
Write a function detect_duplicate() in python using recursion that detects duplicate items in nested lists and returns a set with duplicate items. Example: item_list = [5,['a', 'b'], 'a', [z,z,b]]...
-
Tough Fluid Dynamics Problem attached. Problem doesn't give diameter of pipe so we don't know velocity. The best approach would probably be to work in flow rates instead of velocities. Maybe solve...
-
The Football Association of Zambia (FAZ) has four football games on a particular match day. The Association wants to assign a team of officials each of the four games in a way that will minimize the...
-
Teamworks - Home Welcome to Ashwo. E Home | LDS Busines... Online University-.. M Inbox (20,736) - sj8... G Google (116) YouTube Al Paraphrasing To... Favorites Other favorit Home Client Profile...
-
Suppose the market is semistrong form efficient. Can you expect to earn excess returns if you make trades based on? a. Your brokers information about record earnings for a stock? b. Rumors about a...
-
Mattvilles general fund had several interfund activities during the fiscal year ended June 30, 20X9 (see the left-hand column of the following table). The right-hand column lists the types of...
-
Refer to the information in Problem P12-21. Assume that the dollar is the functional currency. In P12-21 Additional Information 1. DaSilva uses FIFO inventory valuation. Purchases were made uniformly...
-
The funds of Lake City include a debt service fund, a capital projects fund, and an internal service fund. Required a. Explain the use of capital projects funds. Include what they account for, the...
-
Financial accounting theory has accumulated a vast literature. A cynic might be inclined to say that the vastness of the literature is in sharp contrast to its impact on practice. (a) Describe the...
-
What is the basic difference between the purposes of financial and managerial accounting?
-
Is it possible for costs such as salaries or depreciation to end up as assets on the balance sheet? Explain.
Study smarter with the SolutionInn App