Fill in the dollar chargis caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming George Company unes (a) the fair value method and (b) the equity method for accounting for its investments in Tiffany Company (a) Fair Value Method. Transaction (b) Equity Method Investment Dividend Investment Investment Account Revenue Account Revenue 1. At the beginning of Year 1. George bought 40% of Tiffany's common stock at its book value. Total book value of all Tiffany's common stock was $1,000,000 on this date. 2. During Year 1, Tiffany reported $50,000 of net income and paid $50,000 of dividends. 3. During Year 2, Tiffany reported $100,000 of net income and paid $20,000 of dividends. 4. During Year 3, Tiffany reported a net loss of $15,000 and paid $5,000 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue. Note: At the end of Year 3 the FMV of Tiffany's common stock was $1,500,000
Fill in the dollar chargis caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming George Company unes (a) the fair value method and (b) the equity method for accounting for its investments in Tiffany Company (a) Fair Value Method. Transaction (b) Equity Method Investment Dividend Investment Investment Account Revenue Account Revenue 1. At the beginning of Year 1. George bought 40% of Tiffany's common stock at its book value. Total book value of all Tiffany's common stock was $1,000,000 on this date. 2. During Year 1, Tiffany reported $50,000 of net income and paid $50,000 of dividends. 3. During Year 2, Tiffany reported $100,000 of net income and paid $20,000 of dividends. 4. During Year 3, Tiffany reported a net loss of $15,000 and paid $5,000 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue. Note: At the end of Year 3 the FMV of Tiffany's common stock was $1,500,000
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 2PB
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