Question: Recording and Reporting an Equity Method Security Felicia Company acquired some of the 60,000 outstanding common shares of Nueces Corporation during 2014, as a non-

Recording and Reporting an Equity Method Security Felicia Company acquired some of the 60,000 outstanding common shares of Nueces Corporation during 2014, as a non- current investment. The fiscal year for both companies ends December 31. The following transactions occurred during 2014: Jan. 10 Purchased 21,000 of Nueces common shares at $ 12 per share.
Dec. 31 a. Received the 2014 financial statements of Nueces Corporation that reported net earnings of $ 90,000.
b. Nueces Corporation declared and paid a cash dividend of $ 0.60 per share.
c. Determined the market price of Nueces stock to be $ 11 per share. The decrease in price is not considered an impairment in the value of the investment.
Required:
1. What accounting method should the company use? Why?
2. Prepare the journal entries for each of these transactions. If no entry is required, explain why.
3. Show how the non- current investment and the related revenue should be reported on the 2014 financial statements (statement of financial position and statement of earnings) of the company.

Step by Step Solution

★★★★★

3.45 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Req 1 The equity method must be used because the company owns 35 21000 60000 of the total shares out... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

480-B-A-I (6571).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

During 2011, Yale Company acquired some of the 50,000 outstanding shares of the common stock , par $12, of Carol Corporation as available-for-sale investments. The accounting period for both...

During 2011, Princeton Company acquired some of the 50,000 outstanding shares of the common stock , par $12, of Cox Corporation as trading securities. The accounting period for both companies ends...

Felicia Company acquired some of the 60,000 outstanding common shares of Nueces Corporation during 2017, as a non-current investment. The fiscal year for both companies ends December 31. The...

ED-1 Recording and Reporting an Equity Method Security Felicia Company acquired 21,000 of the 60,000 shares of outstanding common stock of Nueces Corporation during 2013 as a long-term investment....

Required information ED-1 (Algo) Recording and Reporting an Equity Method Security [The following information applies to the questions displayed below.] Felicia Company acquired 20,000 of the 80,000...

Is there an answer key for thisassignment from course hero documents? Course Hero Document --- Ch 13 Quiz Student (Int II) Ch 13 Quiz Multiple Choice Identify the choice that best completes the...

E15-7 Recording and Reporting an Equity Method Investment Felicia Company acquired some of the 60,000 shares of outstanding common stock (no par) of Nueces Corporation during 2010 as a long-term...

McKeekin Corp. has a project with the following cash flows: Year Cash Flow 0...... $ 25,000 1...... 11,000 2...... 7,000 What is the IRR of the project? What is happening here?

An electron gun with its collector at a potential of 100 V fires out electrons in a spherical bulb containing hydrogen gas at low pressure (~102 mm of Hg). A magnetic field of 2.83 x 10 T curves the...

In general, the growth rate in earnings will depend on the portion of earnings reinvested each period and: Multiple Choice 1:19 O the firm's weighted average cost of capital. O the earnings retention...

Draw two graphs, one to illustrate small-nation trade diversion and one to illustrate small-nation trade creation. Label and explain each one.

Monti Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the...

The financial statements of Tootsie Roll are presented in Appendix A of this book, together with an auditors reportReport of Independent Auditors. Instructions Using the financial statements and...

The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A. Instructions Answer the following questions for each...

Consider a point to point link 50 km in length. At what bandwidth ( in Mega bits/second) ,would propagation delay (at a speed 2 x 10 8 meters/second) equal transmit delay for 512 byte packets.

Consider the following information What is the expected return on an equally weighted portfolio of these three stocks? What is the variance of a portfolio invested 24 percent each in A and B and 52...

Solve all parts Question:- Given the random processes S(t) and N(t), with the following statistics : E[s(t)] = E[N(t)] = 0, Rss(T) = e 47, RNN(T) = = : 18(t). The process processes s(t) and N(t) are...