Question: Assessing Financial Statement Effects of Equity Method Securities Use the financial statement effects template to record the following transactions involving investments in marketable securities accounted
Assessing Financial Statement Effects of Equity Method Securities Use the financial statement effects template to record the following transactions involving investments in marketable securities accounted for using the equity method. a. Purchased 12,000 common shares of Bakersfield Co. at $10 per share; the shares represent 30% ownership in Bakersfield. b. Received a cash dividend of $1.50 per common share from Bakersfield. c. Bakersfield reported annual net income of $75,000. d. Sold all 12,000 common shares of Bakersfield for $128,500. Use negative signs with answers, if appropriate.
| Balance Sheet | Income Statement | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Noncash | Contrib. | Earned | ||||||||||||||
| Transaction | Cash Asset | + | Assets | = | Liabilities | + | Captial | + | Capital | Revenues | - | Expenses | = | Net income | ||
| a. Purchased shares of Bakersfield. | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | ||||||||
| b. Received cash dividend from Bakersfield. | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | ||||||||
| c. Bakersfield reported annual net income. | Answer Correct 1.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | ||||||||
| d. Sold all Bakersfield shares. | Answer Correct 1.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Correct 1.00 points out of 1.00 | Answer | ||||||||
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