Be 172 on january 1 2022 redwood creek company

Be. 172
On January 1, 2022, Redwood Creek Company purchased 5,000 shares of Monticello Company
stock for $300,000. Redwood Creek’s investment represents 30 percent of the total outstanding
shares of Monticello. During 2022, Monticello paid total dividends of $100,000 and reported net
income of $290,000. What revenue does Redwood report related to this investment, and what is
the amount to be reported as an investment in Monticello stock at December 31?
Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
H-42
Be. 173
On January 1, Ollinger Company purchased a 25% equity investment in Fava Company for
$300,000. At December 31 Fava declared and paid a $20,000 dividend and reported net income
of $120,000.
Instructions
(a) Journalize the transactions
(b) Determine the amount to be reported as an investment in Fava stock at December 31.
Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 8, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC:
Problem Solving, IMA: FSA
FOR INSTRUCTOR USE ONLY

Reporting and Analyzing Investments
Solution 173 (8–12 minutes)
Be. 174
At January 1, 2022, the stock (less than 20% ownership) portfolio held by Darma Corporation
consisted of the following investments:
1. 2,500 shares of H2 common stock purchased for $43 per share.
2. 1,500 shares of Krypto common stock purchased for $50 per share.
At December 31, 2022, the fair values per share were H2 $36 and Krypto $54.
Instructions
(a) Prepare a schedule showing the cost and fair value of the portfolio at December 31, 2022.
(b) Prepare the adjusting entry to report the portfolio at fair value at December 31, 2022.
Ans: N/A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 8, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC:
Problem Solving, IMA: FSA
Solution 174 (8-10 min.)