SOLUTIONS MANUAL Advanced Accounting 5th Edition by Susan
Hamlen, 9781618534248 (A+ Grade)
CHAPTER .1
SOLUTIONS . TO .MULTIPLE .CHOICE .QUESTIONS, .EXERCISES .AND .PROBLEMS
MULTIPLE .CHOICE .QUESTIONS
1. c
$180,000 .- .$160,000 .= $20,000
$125,000 .- .$100,000 .= 25,000
Total .gain $45,000
2. a
$29,000 .– .$26,000 .= .$3,000
3. a
$207,544 .– .[(6% .x .$200,000) .– .(4% .x .$207,544)] .= .$203,846
4. d
Reclassification .of .unrealized .loss .on .AFS .securities .sold $1,000 .credit
.Unrealized .gain .on .AFS .securities .held .at .year-end 6,000 .credit
.(1).Total .amount .reported .in .OCI $7,000 . credit
(1) .$81,000 .– .($100,000 .– .$25,000) .= .$6,000 .unrealized .gain
5. d
$5,000,000 .+ .[40% .x .($600,000 .– .$200,000)] .= .$5,160,000
6. b
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,7. b
Reported .net .income; .35% .x .$7,000,000 .= $
.2,450,000.Less .unconfirmed .profit .on .ending .inventory
35% .x .[$6,000,000 .– .($6,000,000/1.25)] .= . (420,000)
Equity .in .net .income $ .2,030,000
Less .dividends; .35% .x .$2,000,000 (700,000)
Plus .beginning .investment .balance 50,000,000
Ending .investment .balance $51,330,000
8. d
Fizzy’s .entry .to .record .the .acquisition .is:
Current .assets 25,000
Property 2,500,000
Goodwill 25,475,000
Liabilities 3,000,000
Cash 25,000,000
9. b
10. a
11. b
The .entry .to .record .the .sale .is:
Cash 410,000
Loss .on .sale .of .AFS .securities 15,000
Investment .in .AFS .securities 400,000
Other .comprehensive .income 25,000
The .reclassification .of .the .loss .increases .OCI, .and .the .loss .reported .in .income .is .the
.difference .between .the .original .cost .($400,000 .+ .$25,000) .and .sales .proceeds
.($410,000).
12. b
$285,000 .- .$300,000 .= .$15,000 .loss
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,13. d
Investment .balance .at .the .beginning .of .2023 .is .$203,883 .(=$205,768 .– .($6,000 .– .(2% .x
$205,768)); .2% .x .$203,883 .= .$4,078
14. c
Investment .balance .at .the .end .of .2022 .is .$203,827 .(=$205,657 .– .($8,000 .– .(3% .x
$205,657)); .$190,000 .- .$203,827 .= .$13,827 .loss
15. c
$510,000 .- .$500,000 .= .$10,000; .unrealized .gains .are .reported .in .income.
16. b
The .basis .difference .is .$180,000 .(=$3,000,000 .– .(30% .x
.$9,400,000)).(30% .x .$100,000) .– .$180,000/10 .= .$12,000
17. d
Investment .balance, .beginning .of .2020 .$10,000,000
.($2,400,000 .- .$2,000,000) .x .40% .=
160,000 .
($150,000 .- .$200,000) .x .40% .=
(20,000) .
($60,000 .+ .$10,000 .- .$25,000) .x .40% .= . 18,000
Investment .balance, .end .of .2025 $10,158,000
18. b
$10,000,000 .– .($400,000 .+ .$5,000,000 .- .$6,000,000) .= .$10,600,000
19. c
$25,000,000 .– .($500,000 .+ .$8,000,000 .+ .$1,000,000 .- .$6,000,000) .= .$21,500,000
20. c
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, EXERCISES
E1.1 Investment .in .Trading .Securities
(in .millions)
a. . $38 .– .2 .= .$36
b. .Unrealized .gains .and .losses .on .trading .securities .are .reported .in
.income..c.
Investment .in .trading .securities 36
Cash 36
Investment .in .trading .securities 2
Gain .on .trading .securities .(income) 2
d.
Cash 35
Loss .on .trading .securities .(income) 3
Investment .in .trading .securities 38
E1.2 Investment .in .Trading .and .AFS .Securities
Income OCI
a. End .of .2022 $(2,000) $ .5,000
2023 9,000 .(1) (5,000)
b. End .of .2022 $ .5,000 $ .(4,000)
2023 5,000 .(2) 4,000
(1) ($43,000 .- .$38,000) .+ .($64,000 .- .$60,000) .=
.$9,000.(2) ($42,000 .- .$45,000) .+ .($68,000 .-
.$60,000) .= .$5,000
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