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Unformatted text preview: (2.) Prepare any necessary entries for 2013 (other than for the purchase) that would be required if the
securities are classified as available for sale.
On July 1, 2013, Clearwater Inc. purchased 6,000 shares of the outstanding common stock of Mountain
Corporation at a cost of $140,000. Mountain had 30,000 shares of outstanding common stock. The total
book value and total fair value of Mountain's individual net assets on July 1, 2013, are both $700,000.
The total fair value of the 30,000 shares of Mountain's common stock on December 31, 2013, is
$760,000. Both companies have a January through December fiscal year. The following data pertains to
Mountain Corporation during 2013: Required: 167.(1.) Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix
accounts for that investment as an equity method investment.
(2.) Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix elects
the fair-value option.
Matrix, Inc., acquired 25% of Neo Enterprises for $2,000,000 on January 1, 2013. The fair value and
book value of 25% of Neo's identifiable net assets was $2,000,000 and $1,600,000 on that date, and
the difference was attributable to assets that would be depreciated over 10 years. During 2013 Neo
recognized net income of $500,000 and paid dividends of $400,000. Neo had a total fair value of
$10,000,000 as of December 31, 2013.
Required: 168.Determine the amounts that will be associated with the Investment in Webb account and the Goodwill on
Bourne's balance sheets, assuming Bourne accounts for the Webb investment (1) under the equity method
under IFRS, and (2) under proportionate consolidation as allowed by IFRS.
Bourne, Inc., acquired 50% of David Webb Enterprises for $5,000,000 on January 1, 2013. The total
fair value and book value of Webb's identifiable net assets was $8,000,000 on that date. During 2013
Webb recognized net income of $1,000,000 and paid dividends of $1,200,000. Webb had a fair va...
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This document was uploaded on 07/05/2013.
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