Question

Part 4: Investment in Stocks (Equity Securities) Gremlin, Inc. has decided to purchase shares of common...

Part 4: Investment in Stocks (Equity Securities)

Gremlin, Inc. has decided to purchase shares of common stock of Imogene Company. On December 31, 2019, Imogene had 100,000 shares of common stock outstanding.

Required

Compute the requested amounts under each of the following separate scenarios:

  1. Gremlin acquired a 10% interest in Imogene (10,000 common shares) on December 31, 2019 for $135,000. Imogene reported net income of $75,000 for 2020 and declared and paid cash dividends totaling $30,000 during the year. Imogene’s common stock was trading at $13 per share at December 31, 2020. At what amount would Gremlin report its investment in Imogene on its December 31, 2020 balance sheet?
  1. Gremlin acquired a 30% interest in Imogene (30,000 common shares) on December 31, 2019 for $280,000. Imogene reported net income of $75,000 for 2020 and declared and paid cash dividends totaling $30,000 during the year. Imogene’s common stock was trading at $13 per share at December 31, 2020. At what amount would Gremlin report its investment in Imogene on its December 31, 2020 balance sheet?
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
1.) 10%-Ownership
Investment in Imogene on its December 31, 2020 $130,000 (10,000 x 13 )
( At fair value )
2.) 30%-Ownership
Amount $
Investment on December 31,2019 135,000
Add: Investment revenue ( 75,000 x 30% )       26,250
Less: Dividend received ( 30,000 x 30% )         9,000
Investment in Imogene on its December 31, 2020 152,250
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
LANIE INC. has 350,000 common shares authorized and 200,000 common shares issued and outstanding at $2...
LANIE INC. has 350,000 common shares authorized and 200,000 common shares issued and outstanding at $2 par value. On March 17, 2018, LANIE INC. issued to BLOOM INC. 35,000 shares of LANIE INC. common stock as a long-term investment at $40 per share. BLOOM INC. purchased 30,000 more shares of LANIE INC. stock on June 15, 2019 at $41.50 per share. On December 31, 2018, and December 31, 2019, the market value of the LANIE INC. stock is $42 and...
LANIE INC. has 350,000 common shares authorized and 200,000 common shares issued and outstanding at $2...
LANIE INC. has 350,000 common shares authorized and 200,000 common shares issued and outstanding at $2 par value. On March 17, 2018, LANIE INC. issued to BLOOM INC. 35,000 shares of LANIE INC. common stock as a long-term investment at $40 per share. BLOOM INC. purchased 30,000 more shares of LANIE INC. stock on June 15, 2019 at $41.50 per share. On December 31, 2018, and December 31, 2019, the market value of the LANIE INC. stock is $42 and...
Grand Cosmetics acquired 10% of the 200,000 shares of common stock of Cey Fashion at a...
Grand Cosmetics acquired 10% of the 200,000 shares of common stock of Cey Fashion at a total cost of $13 per share on March 18, 2020. On June 30, Cey declared and paid a $60,000 dividend. On December 31, Grand reported net income of $400,000 and Cey reported net income of $110,000 for the year. At December 31, the market price of Cey Fashion was $15 per share. The stock is classified as trading securities. Instruction: Record any necessary journal...
On January 2, 2018, Surfside Co. purchased 12,000 shares of Sand, Inc. for $240,000. The investment...
On January 2, 2018, Surfside Co. purchased 12,000 shares of Sand, Inc. for $240,000. The investment represented 12% of Sand's outstanding shares. On December 31, 2018 each share of Sand was selling for $19 per share and on December 31, 2019 each share of Sand was selling for $23 per share. Sand declared and paid dividends totaling $20,000 in 2018 and 2019. What was the total amount reported on the income statement in 2019 by Surfside for its investment in...
Sosa Company’s stockholders' equity at January 1, 2020 is as follows: Common stock, $10 par; issued...
Sosa Company’s stockholders' equity at January 1, 2020 is as follows: Common stock, $10 par; issued and outstanding 225,000 shares: $2,250,000 Paid-in capital – excess of par: $900,000 Retained earnings: $2,190,000 During 2020, Sosa had the following stock transactions: 1. Acquired 6,000 shares of its stock for $270,000. 2. Sold 3,600 treasury shares at $50 a share. 3. Sold the remaining treasury shares at $41 per share. No other stock transactions occurred during 2020. Sosa reported net income of $540,000...
Sosa Company’s stockholders' equity at January 1, 2020 is as follows: Common stock, $10 par; issued...
Sosa Company’s stockholders' equity at January 1, 2020 is as follows: Common stock, $10 par; issued and outstanding 225,000 shares: $2,250,000 Paid-in capital – excess of par: $900,000 Retained earnings: $2,190,000 During 2020, Sosa had the following stock transactions: 1. Acquired 6,000 shares of its stock for $270,000. 2. Sold 3,600 treasury shares at $50 a share. 3. Sold the remaining treasury shares at $41 per share. No other stock transactions occurred during 2020. Sosa reported net income of $540,000...
3. Jet Corporation had the following balances in its stockholders' equity accounts at December 31, 2019:...
3. Jet Corporation had the following balances in its stockholders' equity accounts at December 31, 2019: Common Stock $5 par, 900,000 shares authorized, 80,000 shares issued, 75,000 shares outstanding $400,000 Paid-in Capital in Excess of Par, Common Stock 1,600,000 Retained Earnings 900,000 Treasury Stock, 5,000 shares (125,000) Total stockholders’ equity $2,775,000 The following transactions occurred during 2020: January 2 Issued 20,000 shares of common stock for $20 per share. May 10 Declared dividends at $0.75 per share. June 10 paid...
In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc.,...
In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $877,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose balance sheet on that date showed total assets of $4,594,000 with liabilities of $984,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. In 2020, Martes reported net income of $235,000. In 2021, Martes reported...
Sosa Company’s stockholders' equity at January 1, 2020 is as follows: Common stock, $10 par; issued...
Sosa Company’s stockholders' equity at January 1, 2020 is as follows: Common stock, $10 par; issued and outstanding 225,000 shares: $2,250,000 Paid-in capital – excess of par: $900,000 Retained earnings: $2,190,000 During 2020, Sosa had the following stock transactions: 1. Acquired 6,000 shares of its stock for $270,000. 2. Sold 3,600 treasury shares at $50 a share. 3. Sold the remaining treasury shares at $41 per share. No other stock transactions occurred during 2020. Sosa reported net income of $540,000...
Situation 1 Oriole Cosmetics acquired 10% of the 187,000 shares of common stock of Martinez Fashion...
Situation 1 Oriole Cosmetics acquired 10% of the 187,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2020. On June 30, Martinez declared and paid $68,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $120,300 for the year. At December 31, the market price of Martinez Fashion was $14 per share. Situation 2 Waterway, Inc. obtained significant influence over Seles Corporation by buying 30% of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT