On 30 April 20X2, Marc Company purchased 4,800 shares of Spencer Ltd. for $29 per share plus $480 in commission. In 20X2, the company received a $0.80 per share dividend, and the shares had a fair value of $24 per share at the end of the year. In 20X3, the dividend was $1.60 per share, and the fair value was $33 per share at the end of the year. In 20X4, the shares were sold for $32 per share less a $600 commission. Required: 1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and 20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)
On 30 April 20X2, Marc Company purchased 4,800 shares of Spencer Ltd. for $29 per share plus $480 in commission. In 20X2, the company received a $0.80 per share dividend, and the shares had a fair value of $24 per share at the end of the year. In 20X3, the dividend was $1.60 per share, and the fair value was $33 per share at the end of the year. In 20X4, the shares were sold for $32 per share less a $600 commission. Required: 1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and 20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter15: Contributed Capital
Section: Chapter Questions
Problem 1MC
Related questions
Question
![On 30 April 20X2, Marc Company purchased 4,800 shares of Spencer Ltd. for $29 per share plus $480 in commission. In 20X2, the
company received a $0.80 per share dividend, and the shares had a fair value of $24 per share at the end of the year. In 20X3, the
dividend was $1.60 per share, and the fair value was $33 per share at the end of the year. In 20X4, the shares were sold for $32 per
share less a $600 commission.
Required:
1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and
20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)
a. Cost method.
Earnings
Dividend revenue
Fees and commissions
Gain on sale
Statement of financial
position
Investment
OCI: Holding gain/(loss)
S
S
$
20x2
20X3
3,849
$ 7,680
0
$
0 S
0
0
0
$ 139,680 $ 139,680
$
0
$
S
$
20X4
0
0
14,520 X
0
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff019db5e-2204-429b-9709-0f5ace1a8cf4%2Fdb65bd20-8ee6-4c59-862e-125f2e457834%2F3uqk193_processed.png&w=3840&q=75)
Transcribed Image Text:On 30 April 20X2, Marc Company purchased 4,800 shares of Spencer Ltd. for $29 per share plus $480 in commission. In 20X2, the
company received a $0.80 per share dividend, and the shares had a fair value of $24 per share at the end of the year. In 20X3, the
dividend was $1.60 per share, and the fair value was $33 per share at the end of the year. In 20X4, the shares were sold for $32 per
share less a $600 commission.
Required:
1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and
20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)
a. Cost method.
Earnings
Dividend revenue
Fees and commissions
Gain on sale
Statement of financial
position
Investment
OCI: Holding gain/(loss)
S
S
$
20x2
20X3
3,849
$ 7,680
0
$
0 S
0
0
0
$ 139,680 $ 139,680
$
0
$
S
$
20X4
0
0
14,520 X
0
0
![b. FVTPL method.
Earnings
Dividend revenue
Fees and commissions
Holding gains (losses)
Statement of financial
position
Investment
OCI: Holding gain/(loss)
Earnings
Dividend revenue
Fees and commissions
Holding gains (losses)
Statement of financial
position
Investment
OCI: Holding gain/(loss)
Transfer to Retained
20X2
$ 3,840 $
0X $
Earnings
(24,480) X
$ 115,200 $ 158,400
0 $
$
20X2
3,840 $
$
0
0
20X3
c. FVOCI-Equity method; realized amounts are transferred to retained earnings.
$ 115,200
(24,480)
7,680
0
43,200
0
20X3
7,680
0
0
$ 158,400
43,200
0 $
0
$
$
$
$
20X4
0
0
4,200 X
20X4
0
0
14,520
18,720
18,720
"Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff019db5e-2204-429b-9709-0f5ace1a8cf4%2Fdb65bd20-8ee6-4c59-862e-125f2e457834%2Fcyltvxb_processed.png&w=3840&q=75)
Transcribed Image Text:b. FVTPL method.
Earnings
Dividend revenue
Fees and commissions
Holding gains (losses)
Statement of financial
position
Investment
OCI: Holding gain/(loss)
Earnings
Dividend revenue
Fees and commissions
Holding gains (losses)
Statement of financial
position
Investment
OCI: Holding gain/(loss)
Transfer to Retained
20X2
$ 3,840 $
0X $
Earnings
(24,480) X
$ 115,200 $ 158,400
0 $
$
20X2
3,840 $
$
0
0
20X3
c. FVOCI-Equity method; realized amounts are transferred to retained earnings.
$ 115,200
(24,480)
7,680
0
43,200
0
20X3
7,680
0
0
$ 158,400
43,200
0 $
0
$
$
$
$
20X4
0
0
4,200 X
20X4
0
0
14,520
18,720
18,720
"Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.
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