Chapter 1 the equity method of accounting for investments Chapter Outline I. Three methods are principally used to account for an investment in equity securities. A. Fair-value method: applied by an investor when only a small percentage of a company’s voting stock is held. 1. Income is recognized when dividends are declared. 2. Portfolios are reported at market value. If market values are unavailable‚ investment is reported at cost. B. Consolidation: when
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dr 120‚000 cr New Balance‚ January 1‚ 2012 680‚000 cr 546‚200 dr Service cost 58‚000 dr 58‚000 cr Interest Cost $680‚000 x 9% = $61‚200 61‚200 dr 61‚200 cr Actual return 52‚280 cr 52‚280 dr Unexpected gain/ loss Amortization of PSC 17‚000 dr. 17‚000 cr Contributions 65‚000 cr 65‚000 dr Benefits 40‚000 dr 40‚000 cr Journal entry for 2012 83‚920 dr 65‚000 cr 103‚000 dr 121‚920 cr Accumulated OCI‚ Jan. 1‚ 2012 -0- Balance‚ Dec. 31‚ 2012
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$685‚850. $528‚850. $939‚350. → $638‚750. Willkom’s equipment book value—12/31/13 $330‚750 Szabo’s equipment book value—12/31/13 198‚100 Original purchase price allocation to Szabo’s equipment ($440‚000 – $283‚000) 157‚000 Amortization of allocation ($157‚000 ÷ 10 years for 3 years) (47‚100) Consolidated equipment $638‚750 2. award: 0 out of 0.00 points On January 1‚ 2011‚ Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona‚ Inc
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Case Study of Genentech Inc. Company Background Genentech is considered as the founder of the bio-technology industry. It has been delivering on the promise of biotechnology for almost 30 years‚ using human genetic information to discover‚ develop‚ commercialize and manufacture bio-therapeutics that address significant unmet medical needs. It was founded by venture capitalist Robert A. Swanson and biochemist Dr. Herbert W. Boyer. Genentech is among the world’s leading biotech companies‚
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Bond issue price and premium amortization Bond issue price and premium amortization On January 1‚ 2011‚ Placido Co. issued ten-year bonds with a face value of P1‚000‚000 and a stated interest rate of 10%‚ payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 10 periods at 10% ......................................... .386 Present value of 1 for 10 periods at 12% ...........
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Probability Stop Production (A) 0.75*$60m = -$45m 28% Continue Production (B) $30m - $60m = -$30m 28% $3.9m B 0.3 Disappointment 0.7 Morgan Directs (C) $35m -$60m = -$25m 13% -30 28 $3.48m D Produce Movie $26.5m A 0.6 On Schedule 0.2 Blockbuster (D) $180m-$60m = $120m 8% -25 41 0.5 Hit (E) $80m-$60m = $20m 21% -5 15% 10 15% 71 56 $2.5m C 0.3 McManus Directs 0.5 Hit (F) $45m-$35m = $10m 0.5 Modest Disappointment (G) $30m-$35m = -$5m 20 92 120 HBO Box Office 100 100% (H) $3m
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E12-1 (Classification Issues—Intangibles) Presented below is a list of items that could be included in the intangible assets section of the balance sheet. 1. Investment in a subsidiary company. 2. Timberland. 3. Cost of engineering activity required to advance the design of a product to the manufacturing stage. 4. Lease prepayment (6 months’ rent paid in advance). 5. Cost of equipment obtained. 6. Cost of searching for applications of new research findings. 7. Costs incurred in the formation
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Exercises and Problems XACC/291 Principles of Accounting II Week 2 February 8‚ 2015 Exercise E9-1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011 (determine cost of the plant acquisitions). 1. Paid $5‚000 of accrued taxes at time plant site was acquired. 2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. 3. Paid $850 sales taxes on new delivery
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http://ries.typepad.com/ries_blog/2009/08/index.html August 13‚ 2009 Bud Light: What goes around finally comes around At last month’s beer summit it was the brew of choice for the leader of the free world‚ Barack Obama. It is the best-selling beer in the United States and a close relative of the world’s best-selling beer. Yet‚ the headlines this week have been decidedly negative. “How Bud Light lost its sense of humor-and‚ subsequently‚ sales. Wary of 3% drop for its biggest brand‚ A-B dials
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about everything Netflix does. Netflix became the worlds largest subscription service for sending DVD’s by mail and streaming movies and TV episodes over the internet which attracted over 15 million subscribers by July of 2010. On the other hand‚ blockbuster and movie galleries were facing financial disasters and even bankruptcy. Netflix didn’t have much competition and was able to increment profit through their online renting store. For instance‚ consumers were able to‚ purchase movies‚ DVD’s and
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