Chapter%2014%20-%20In-Class%20Exercises%20-%20Solution%20#2-3

Chapter%2014%20-%20In-Class%20Exercises%20-%20Solution%20#2-3

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: In‐Class Exercises Exercise #2 Relevant Facts: Investment in Universal (40% stake) Net income in 2008 Dividends declared in 2008 40% of Value of Unrecorded patent Annual amortization of patent (10‐year life) 40% of Unrecorded value of headquarters Annual depreciation of unrecorded value (20‐year life) Investment in Universal Co. Stock Cash Investment in Universal Co. Stock Income from Investment in Universal Co. Stock Adjustment for net income Dividends Receivable Investment in Universal Co. Stock Adjustment for payment of dividends Income from Investment in Universal Co. Stock Investment in Universal Co. Stock $ 2,500,000 800,000 300,000 300,000 30,000 200,000 10,000 2,500,000 Chapter 14 2,500,000 320,000 320,000 120,000 120,000 40,000 40,000 ACCT 4050 Page 5 of 6 Chapter 14 ‐ In‐Class Exercises In‐Class Exercises Exercise #3 Trading portfolio adjustment: Security Cost Market Difference Stock A 23,000 25,000 Stock B 12,500 10,400 35,500 35,400 100 credit Chapter 14 Mkt Adjustment ‐ Trading 400 300 100 Market Adjustment‐‐Trading Securities Unrealized Gain on Trading Securities AFS portfolio adjustment: Security Cost Market Difference Stock C 26,000 25,000 Bond Y 43,500 46,300 69,500 71,300 1,800 debit 300 300 Mkt Adjustment ‐ AFS 1,200 3,000 1,800 Market Adjustment‐‐AFS Securities Unrealized Gain on AFS Securities Sale of Stock A: Cash Realized Gain on Sale of Securities Investment in Trading Securities Transfer of Bond Z to AFS Investment in AFS Securities Unrealized Increase/Decrease in Value of AFS Securities Investment in Held‐to‐Maturity Securities Transfer of Stock C from AFS to Trading Investment in Trading Securities Market Adjustment‐‐AFS Securities Unrealized Gain on Transfer Unrealized Increase/Decrease in Value of AFS Securities Investment in AFS Securities 3,000 3,000 26,000 3,000 23,000 143,000 7,000 150,000 27,500 1,000 1,500 1,000 26,000 ACCT 4050 Page 6 of 6 Chapter 14 ‐ In‐Class Exercises ...
View Full Document

Ask a homework question - tutors are online