At December 31, 2020, Bard Heating Supplies held 17,500 common shares of Reddick Radiators that represented an
Question:
At December 31, 2020, Bard Heating Supplies held 17,500 common shares of Reddick Radiators that represented an ownership interest of 8%. Bard reported the investment in Reddick Radiators as:
12/31/2020 | |
Investment in Reddick Radiators @ Historic Cost | $488,250 |
Fair Value Adjustment Allowance | 63,000 |
Investment in Reddick Radiators @ Fair Value | $551,250 |
Bard Heating Supplies held the investment in Reddick Radiators throughout 2021 and intends to continue holding the shares in 2022 and beyond.
Bard Heating Supplies is unable to gain Board representation or influence in any way the operating and financial decisions of Reddick Radiators from its ownership interest.
Fair Value Method through Net Income #1
Bard Heating Supplies received 1,750 additional shares on March 15, 2021 as a 10% stock dividend declared and distributed by Reddick Radiators at a time when the shares had a fair market value of $30.00 per share.
Select the three answers below that correctly describe the treatment of stock dividend by Bard Heating Supplies.
Check All That Apply
Recognize no revenue
Recognize Stock Dividend Revenue of $1,750
Recognize Stock Dividend Revenue of $52,500
Do not change the number of Reddick Radiators shares held
Increase the number of Reddick Radiators shares held to 19,250 shares
Decrease the number of Reddick Radiators shares held to 15,750 shares
Do not change the cost basis per share of the investment in Reddick Radiators
Change the cost basis per share of the investment in Reddick Radiators to $25.364
Change the cost basis per share of the investment in Reddick Radiators to $28.091
Accounting Principles
ISBN: 978-1119411482
13th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso