Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Question
Chapter A2, Problem 10MCQ
To determine
Concept introduction:
Equity Method:
The Equity method is applied for the accounting for investment in equity shares of a company where the investment has the significant influence over the company. Under this method the share of income earned by the company is recorded by the investor in the investment account and the investment account is decreased by any divided received.
To choose:
The correct account to be debited.
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Students have asked these similar questions
Paul Company presented the following information pertaining to its investments in equity securities. FVPL FVOCICost P1,000,000 P1,000,000Market value December 31, 2020 1,050,000 980,000 December 31, 2019 950,000 920,000
2.What amount should Paul report as unrealized gains/losses in the shareholders' equity of its December 31, 2020 statement of financial position?
Problem 15-7 (ACP)
Chaplain Company was very active in acquiring and selling
investments in equity securities. Data regarding the
securities are:
Cost
Market value
December 31, 2020
Trading securities
Securities not held for trading
5,000,000
3,000,000
4,600,000
3,100,000
December 31, 2021
Trading securities
Securities not held for trading
5,000,000
3,000,000
5,500,000
3,300,000
The entity made an irrevocable 'election to present changes
in fair value of the securities not held for trading in other
comprehensive income.
Required:
Prepare journal entries to recognize the changes in market
value for 2020 and 2021.
Question 1
The following information relates to a company listed on Luse- Mungwi PLC
ZMK
Issued share capital (1000 shares)
Share premium.
Reserves.
Share holders funds.
6% Irredeemable Debentures.
9% Redeemable Debentures.
Bank loan.
Total Long Term Liabilities.
Million
4 000
2 600
290
6,890
2,800
2,900
1 000
6 700
The current cum interest market value per k100 units is k103 and k105 fir the 6% and 9%
Debentures respectively. The 9% Debenture is redeemable at par in 10 years time. The bank
loan bears interest rate of 2% above the base rate (current base rate is 15%). The current ex-div
market price of shares is k1, 100 and a dividend of K100 per share which is expected to grow at
a rate of 5% per year has just been paid. The effective corporation tax rate for Mungwi is 30%.
Required:
A) Calculate the effective after tax weighted Average Cost of Capital (WACC) fir Mungwi PLC
Chapter A2 Solutions
Cornerstones of Financial Accounting
Ch. A2 - How do long-term investments differ from...Ch. A2 - Prob. 2DQCh. A2 - Prob. 3DQCh. A2 - Prob. 4DQCh. A2 - Prob. 5DQCh. A2 - Prob. 6DQCh. A2 - Prob. 7DQCh. A2 - How does the equity method discourage the...Ch. A2 - Prob. 9DQCh. A2 - Prob. 10DQ
Ch. A2 - Prob. 11DQCh. A2 - Prob. 12DQCh. A2 - Prob. 13DQCh. A2 - Prob. 14DQCh. A2 - Prob. 15DQCh. A2 - Prob. 1MCQCh. A2 - Prob. 2MCQCh. A2 - Prob. 3MCQCh. A2 - Prob. 4MCQCh. A2 - Prob. 5MCQCh. A2 - Prob. 6MCQCh. A2 - Prob. 7MCQCh. A2 - Prob. 8MCQCh. A2 - Prob. 9MCQCh. A2 - Prob. 10MCQCh. A2 - Prob. 11MCQCh. A2 - When the market value of a companys...Ch. A2 - Prob. 13MCQCh. A2 - Prob. 14MCQCh. A2 - Prob. 15MCQCh. A2 - Prob. 16MCQCh. A2 - Prob. 17ECh. A2 - Trading Securities Pear Investments began...Ch. A2 - Prob. 19ECh. A2 - Prob. 20ECh. A2 - Adjusting the Allowance to Adjust Trading...Ch. A2 - Prob. 22ECh. A2 - Prob. 23ECh. A2 - Prob. 24ECh. A2 - Prob. 25ECh. A2 - Prob. 26ECh. A2 - Prob. 27ECh. A2 - Prob. 28ECh. A2 - Prob. 29ECh. A2 - Prob. 30E
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