Skysong Inc acquired 100,000 common shares, which is 25% of the outstanding common shares, of Tahiti...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Skysong Inc acquired 100,000 common shares, which is 25% of the outstanding common shares, of Tahiti Ltd. on January 1, 2020 for $495,000. At the time of purchase, Tahiti Ltd. depreciable assets were undervalued by $32,000. The depreciable assets had a remaining useful life of 5 years with no salvage value. Tahiti Ltd. declared and paid a cash dividend of $0.35 per share on July 31, 2020. Tahiti Ltd. reported $1.2 million as net income on December 31, 2020 for the year ending. Also, on December 31, 2020, the fair value of the investment in Tahiti Ltd shares was $545,000. Prepare all the journal entries for 2020 in the books of Skysong Inc. relating to above transactions assuming that Skysong Inc. is not in a position to exercise significant influence over Tahiti Ltd, and that Skysong elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Skysong Inc acquired 100,000 common shares, which is 25% of the outstanding common shares, of Tahiti Ltd. on January 1, 2020 for $495,000. At the time of purchase, Tahiti Ltd. depreciable assets were undervalued by $32,000. The depreciable assets had a remaining useful life of 5 years with no salvage value. Tahiti Ltd. declared and paid a cash dividend of $0.35 per share on July 31, 2020. Tahiti Ltd. reported $1.2 million as net income on December 31, 2020 for the year ending. Also, on December 31, 2020, the fair value of the investment in Tahiti Ltd shares was $545,000. Prepare all the journal entries for 2020 in the books of Skysong Inc. relating to above transactions assuming that Skysong Inc. is not in a position to exercise significant influence over Tahiti Ltd, and that Skysong elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit
Expert Answer:
Answer rating: 100% (QA)
Date Accounts Title Dr Cr Jan 1 2020 Investment in Tahiti FVNI 495000 Cash 49500... View the full answer
Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1260305838
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
Posted Date:
Students also viewed these accounting questions
-
Situation 1 Espino Company has the following stock outstanding: Common Stock Preferred Stock 100,000 shares 9,000 shares s0.50 par value s20 par, $2 dividend The amount available for dividends this...
-
In 2014, Quito Inc. purchased stock as follows: (a) Acquired 2,000 shares of Hollow Arts Corp. common stock (par value $20) in ex- change for 1,200 shares of Quito Inc. preferred stock (par value...
-
The J. Miles Corp. has 25 million shares outstanding with a share price of $20 per share. Miles also has outstanding zero-coupon debt with a 5-year maturity, a face value of $900 million, and a yield...
-
How do researchers investigate the effectiveness of the integrated reporting initiative?
-
(a)Write one or more appropriate Lewis structures for the nitrite ion, NO2- (b) With what allotrope of oxygen is it iso-electronic? (c) What would you predict for the lengths of the bonds in NO2-...
-
Russell (birthdate February 2, 1966) and Linda (birthdate August 30, 1971) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and...
-
Simulate tossing a coin. (a) For a balanced coin, generate 100 flips. (b) For a coin with probability of heads 0.8, generate 100 flips.
-
At Western University the historical mean of scholarship examination scores for fresh-man applications is 900. A historical population standard deviation = 180 is assumed known. Each year, the...
-
Solve the following recurrence relations. You may use any method discussed in class, but you need to justify your answers by showing all relevant details. If you use a guess-and-prove method,...
-
The fish department of the local grocery store faces unique problems. Fish is extremely perishable and can only be sold on the day it arrives in the store. Fish is delivered at 3 am and can be sold...
-
The condensed balance sheet and income statement for Marjoram Company are presented below. 1.Compute the current ratio for Marjoram Company. 2.Compute the acid-test ratio for Marjoram Company. 3....
-
Ridhin Co Ltd is a company that manufactures and sells a specific spare part for Land Rovers. The following budgeted/actual information is provided in relation to the production of this spare part. $...
-
Tiger Air, one of the largest Asian airlines in terms of passenger numbers, has enjoyed rapid growth since its establishment in 1980. It has 199 Boeing B-737, with 113 backorders. Assume that a new...
-
MoviePlex is planning to raise a total of $5,000,000 with a bond issue. Each of the bonds has a face (par) value of $1,000 and coupon rate of 4%. The company's applicable tax rate is 21%. a) What is...
-
1. Collect relevant financial data - This includes financial statements, tax returns, credit reports, and other documents related to the property. 2. Analyse the financial data - Analyse the data to...
-
In the 1950s and 1960s, most families ranked replacing a breadwinner's income as a very high priority. This led to a wide distribution of life insurance. Today, what financial goals rank higher than...
-
A truck accelerates uniformly from rest to 22.5 m/s in 6.1 s along a level stretch of road. Determine the average power (in W) required to accelerate the truck for the following values of the weight...
-
Question 6.10 Current and deferred tax worksheets and tax entries From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position...
-
Corporations may choose to engage in a non-strategic investment in debt or shares for which of the following reasons: a. To earn greater interest or dividend income on available excess cash b. To...
-
Purity Vegetable Corp. issued $200,000 of 6% bonds on November 1, 2020, at par value. The bonds were dated October 1, 2020, and pay interest each April 1 and October 1. Record the issue of the bonds...
-
a. Calculate the debt to equity ratio for 2019 and 2020, for the following three separate companies. b. Comment on whether the ratio for each has improved or weakened from a risk perspective. Outdoor...
-
Explain the building blocks of accounting: ethics, principles, and assumptions.
-
On May 1, 2025, Park Flying School Ltd., a company that provides flying lessons, was started with an investment of 45,000 cash in the business. Following are the assets and liabilities of the company...
-
The historical cost basis results in: a. initially recording assets at cost and adjusting when the current value changes. b. keeping activities of an entity separate and distinct from its owner. c....
Study smarter with the SolutionInn App