Question
Accounting for Investments Using the Cost and Equity Methods On 1/1/x1, Omega Corporations net worth was as follows: Common stock (15,000 shares, $10 par value)
Accounting for Investments Using the Cost and Equity Methods
On 1/1/x1, Omega Corporations net worth was as follows:
Common stock (15,000 shares, $10 par value) $150,000
Additional paid-in capital 30,000
Retained Earnings 60,000
Total $240,000
On 1/1/14, Alpha, Inc. purchased 3,000 shares of Omega Corporation at a price of $29 per share. Omega Corporations equity securities are not readily marketable. Alpha could not attribute any of the excess cost over book value to any specific Omega assets and considered this excess to be goodwill.
Omegas earnings and dividends for the next three years were as follows:
Year Net Income Dividends
20x1 10,000 6,000
20x2 25.000 30,000
20x3 80,000 40,000
Required:
Complete the following table, assuming that Alpha, Inc. had significant influence over Omega Corporation.
| For Alpha, Inc.s financial statements:
Year |
Balance sheet amount reported for Investment in Omega Corporation at end of 12/31 | Income statement amount reported for Investment Income from Omega Corporation for the fiscal year ended 12/31 |
| 20x1
|
|
|
| 20x2
|
|
|
| 20x3
|
|
|
Complete the following table, assuming that Alpha, Inc. did not have significant influence over Omega Corporation:
| For Alpha, Inc.s financial statements:
Year |
Balance sheet amount reported for Investment in Omega Corporation at end of 12/31 | Income statement amount reported for Investment Income from Omega Corporation for the fiscal year ended 12/31 |
| 20x1
|
|
|
| 20x2
|
|
|
| 20x3
|
|
|
Attach an Accounting for Investments Using the Cost and Equity Methods
On 1/1/x1, Omega Corporations net worth was as follows:
Common stock (15,000 shares, $10 par value) $150,000
Additional paid-in capital 30,000
Retained Earnings 60,000
Total $240,000
On 1/1/14, Alpha, Inc. purchased 3,000 shares of Omega Corporation at a price of $29 per share. Omega Corporations equity securities are not readily marketable. Alpha could not attribute any of the excess cost over book value to any specific Omega assets and considered this excess to be goodwill.
Omegas earnings and dividends for the next three years were as follows:
Year Net Income Dividends
20x1 10,000 6,000
20x2 25.000 30,000
20x3 80,000 40,000
Required:
Complete the following table, assuming that Alpha, Inc. had significant influence over Omega Corporation.
| For Alpha, Inc.s financial statements:
Year |
Balance sheet amount reported for Investment in Omega Corporation at end of 12/31 | Income statement amount reported for Investment Income from Omega Corporation for the fiscal year ended 12/31 |
| 20x1
|
|
|
| 20x2
|
|
|
| 20x3
|
|
|
Complete the following table, assuming that Alpha, Inc. did not have significant influence over Omega Corporation:
| For Alpha, Inc.s financial statements:
Year |
Balance sheet amount reported for Investment in Omega Corporation at end of 12/31 | Income statement amount reported for Investment Income from Omega Corporation for the fiscal year ended 12/31 |
| 20x1
|
|
|
| 20x2
|
|
|
| 20x3
|
|
|
Attach an Excel spreadsheet containing documentation to support the above reported amounts.Excel spreadsheet containing documentation to support the above reported amounts.
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Hong Kong Auditing Economic Theory And Practice
Authors: Simon Fung, Ferdinard A. Gul
3rd Edition
9629372347, 978-9629372347
