Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter SA1, Problem 4.1E
Exercise SA1-4 Equity method, change in interest. Hanson Corporation purchases a 10% interest in Novic Company on January 1, 2016, and an additional 15% interest on January 1, 2018. These investments cost Hanson Corporation $80,000 and $110.000, respectively. The following
Any excess of cost over book value on the original investment is attributed to
Novic Company has income of $30,000, $30.000, and $40,000 for 2016, 2017, and 2018, respectively. Novic pays dividends of $0.20 per share in 2017 and 2018.
Ignore income tax considerations, and assume equity method
Prepare the cost-to-equity conversion entry on January 1. 2018, when Hanson’s investment in Novic Company first exceeds 20%. Any supporting schedules should be in good form.
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1. On January 1, 2021 Dona Company purchased 10% of another entity’s outstanding ordinary shares for P6,000,000. The investment classified as nonmarketable equity security and accounted for under the cost method. The following data pertain to investee’s operations for 2021 and 2022:2021 2022Net income 3,000,000 4,000,000Dividend paid none 9,000,000
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Use the following information for question 1
CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an
available-for-sale investment for a price of P120,00.
On January 1, 2015, CPA Corporation purchases 7,000 additional shares of Sticky
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to 70%. Sticky Company had the following statement financial position just prior to CPA
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