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Modern Advanced Accounting In Canada
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Modern Advanced Accounting In Canada
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Modern Advanced Accounting In Canada 9th Edition by Hilton Murray Test Bank All chapters ISBN: 9781259654695
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SOLUTION MANUAL Modern Advanced Accounting In Canada, 10th Edition By Darrell Herauf, Chima Mbagwu, Chapters 1 - 12, Complete
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Modern Advanced Accounting In Canada
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Modern Advanced Accounting In Canada, 10th EditionSolution Manual By Darrell Herauf, Chima Mbagwu, Verified
Chapters 1 - 12, Complete Newest Version
On January 1 of the current year, Barger Company buys 150,000 shares of Booker,
Inc.'s common stock for $1,200,000, the book value of the shares. This purchase
gave Barger 25% ownership in Booker and the ability to significantly influence
operating and financing decisions. At the time of the acquisition, Booker had a total
book value of $4,800,000. During the current year, Booker reported net income of
$700,000 and paid a $.85 per share dividend.
Barger elects to use the equity method of accounting. What is the balance in the
Investment in Booker account in the records of Barger Company at December 31, of
the current year?
A) $1,200,000
B) $1,247,500
C) $1,772,500
D) $1,900,000
E) $1,152,500 - ANSWER: B) $1,247,500
On January 1 of the current year, Barger Company buys 150,000 shares of Booker,
Inc.'s common stock for $1,200,000, the book value of the shares. This purchase
gave Barger 25% ownership in Booker and the ability to significantly influence
operating and financing decisions. At the time of the acquisition, Booker had a total
book value of $4,800,000. During the current year, Booker reported net income of
$700,000 and paid a $.85 per share dividend.
A. Cash $127,500
Dividend Income $127,500
B. Cash $127,500
Investment in Barger Company $127,500
C. Cash $127,500
Investment in Booker, Inc. $127,500
D. Investment in Booker, Inc. $127,500
Dividend Income $127,500
E. Investment in Barger Company $127,500
Dividend Income $127,500
Using the equity method of accounting, what is the journal entry to record the
receipt of dividends during the current year?
A) A
B) B
C) C
D) D
E) E - ANSWER: C) C
,On January 1 of the current year, Barger Company buys 150,000 shares of Booker,
Inc.'s common stock for $1,200,000, the book value of the shares. This purchase
gave Barger 25% ownership in Booker and the ability to significantly influence
operating and financing decisions. At the time of the acquisition, Booker had a total
book value of $4,800,000. During the current year, Booker reported net income of
$700,000 and paid a $.85 per share dividend.
A. No entry is recorded
B. Investment in Booker, Inc. $700,000
Equity in Investee Income $700,000
C. Investment in Barger Company $700,00
Equity in Investee Income $700,000
D. Investment in Booker, Inc. $175,000
Equity in Investee Income $175,000
E. Investment in Barger Company $175,000
Equity in Investee Income $175,000
Using the equity method of accounting, what is the journal entry to accrue the
current year earnings?
A) A
B) B
C) C
D) D
E) E - ANSWER: D) D
Tara Company owns 30% of Hawkins, Inc. and applies the equity method. During the
current year, Hawkins buys inventory costing $400,000 and sells it to Tara for
$500,000. At the end of the year, only 25% of this merchandise is still being held by
Tara. What amount of unrealized gain must be deferred by Hawkins in reporting on
the equity method?
A) $937.50
B) $30,000.00
C) $25,000.00
D) $7,500.00
E) $100,000.00 - ANSWER: D) $7,500.00
What is a downstream sale?
A) A sale from an investor to its investee
B) A sale from a producer to its outside supplier
C) A sale from an investee to its investor
D) A sale from one manufacturer to another
E) A sale from a small company to a large one - ANSWER: A) A sale from an investor
to its investee
What is an upstream sale?
A) A sale from an investor to its investee
B) A sale from a producer to its outside supplier
C) A sale from an investee to its investor
, D) A sale from one manufacturer to another
E) A sale from a small company to a large one - ANSWER: C) A sale from an investee
to its investor
TunaCo purchases 25% of Stanley, Inc. on January 1 of the current year for $500,000.
This acquisition gives TunaCo the ability to apply significant influence to Stanley's
operating and financing policies and TunaCo elects to use the equity method of
accounting. Stanley reports assets on that date of $1,600,000 with liabilities of
$400,000. One building with a 15-year life has a book value of $100,000 and a fair
market value of $400,000. During the current year, Stanley, Inc. reports net income
of $140,000, while paying out dividends of $70,000 for the year. What is the
Investment in Stanley account balance in TunaCo's accounting records at the end of
the current year?
A) $500,000
B) $517,500
C) $530,000
D) $460,000
E) $512,500 - ANSWER: E) $512,500
Smith Company holds 20% of the outstanding shares of Leef Greeting Cards and
applies the equity method of accounting. For the current year, Leef reports earnings
of $100,000 and pays cash dividends of $22,000. During the current year, Leef
acquired inventory for $80,000, which was then sold to Smith for $100,000. At the
end of the current year, Smith continues to hold merchandise with a transfer price of
$40,000. Assuming no amortization expense related to this investment, what Equity
in Investee Income should Smith report in the current year?
A) $18,400
B) $-0-
C) $12,000
D) $14,000
E) $7,600 - ANSWER: A) $18,400
Norbin Company uses the equity method to account for its investment in Stice
Company's common stock. After the acquisition date, the investment account
reported on Norbin's balance sheet would
A) be increased by Norbin's share of Stice's earnings and decreased by Norbin's share
of Stice's losses.
B) be increased by Norbin's share of Stice's earnings but not be affected by Norbin's
share of Stice's losses.
C) not be affected by Norbin's share of Stice's earnings and losses.
D) not be affected by Norbin's share of Stice's earnings but be decreased by Norbin's
share of Stice's losses.
E) be decreased by Norbin's share of Stice's earnings and increased by Norbin's share
of Stice's losses. - ANSWER: A) be increased by Norbin's share of Stice's earnings and
decreased by Norbin's share of Stice's losses.
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