Please help me with the following 3 assignments. Please follow directions and please highlight answers.

\fFINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E9-17 Requirements 1. Determine the cost of the land, land improvements, and building. 2. Which of these assets will Lavallee depreciate? Solution: Requirement 1 Land Purchase Price Note payable Property tax Title insurance Remove building Construct building Fence Sign Lighting xx xx xx xx xx Totals $ Land Improvements Building $ 450,000 xx xx xx 365,000 $ 78,000 $ 450,000 Requirement 2 Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 1 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E9-27 Compute the asset turnover ratio for 2016. Solution: Cash Accounts Receivable Merchandise Inventory Prepaid Expenses Property, Plant, and equipment, net Total Assets Asset turnover ratio = = = = Dec. 31, 2016 $ 26,000.00 xx xx xx xx $ 349,000.00 Dec. 31 2015 $ 28,000.00 xx xx xx xx $ 187,000.00 Net sales / Average total assets $440000/ ((349000 + 187000) / 2) 440000 / 268000 1.64 times (rounded) Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 2 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E9A-29 Requirements 1. Record the journal entry for depreciation expense in 2016. 2. Determine Pact's cost of the new truck. 3. Record the journal entry for the exchange of assets on March 15, 2016. Assume the exchange had commercial substance. Solution: Requirement 1 Depreciation per unit = = = (cost-residual value) / useful life in units (450000 - ?) / 1000000 miles (a) ? Per mile Units-of-production = = = Depreciation per unit x current year usage (a) x 82000 miles $xx in 2013 = = = Depreciation per unit x current year usage (a) x ? miles $xx in 2014 = = = Depreciation per unit x current year usage ( ? Miles $xx in 2015 = = = Depreciation per unit x current year usage (a) x 39000 miles $xx in 2016 Total accumulated depreciation = all the years added up Date Mar. 15 Accounts and Explanation Depreciation Expense - Truck Debit xx Chapter 9: Plant Assets, Natural Resources, and Intangibles Credit Page 3 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition xx Accumulated Dep. - Truck To record depreication on truck Requirement 2 Market Value of assets received Less: Book Value of Asset Exchanged Cost Less: Accumulated Depreciation Cash Paid Gain or (loss) 343350 450,000 (xx) = 316350 xx 343350 - Requirement 3 Date Accounts and Explanation 15-Mar Truck (new) Accumulated Depreciation - Truck Truck (old) Cash Exchanged old truck and cash for new truck Credit Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 4 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 5 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition 50 Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 6 of 6 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-8 Requirements 1. Journalize the 2016 transactions related to Bennett's bond investment. Explanations are not required. 2. Journalize the transaction related to Bennett's disposition of the bond at maturity. Determine the date. (Assume the last interest payment has already been recorded.) Explanations are not required. Solution: Requirement 1 Date 2016 Jan. 1 Accounts and Explanation Debit Long-Term Investments -- Held-to-Maturity Cash Jun. 30 Cash Credit 150,000 150,000 (a) Interest Revenue (a) Dec. 31 Cash (a) Interest Revenue (a) Calculations: (a) Semiannual interest = Face (par) value Payment received = ?? = Chapter 10: Investments Annual stated rate x 1/2 3% 1/2 (a) Page 1 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Requirement 2 Date Accounts and Explanation Debit 2030 Dec. 31 Cash Long-term Investments -- Held to Maturity Chapter 10: Investments Credit Page 2 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-9 Requirements 1. Journalize any required 2016 entries for the bond investment. 2. How much cash interest will League Up receive each year from CocoCorp? How much interest revenue will League Up report during 2016 on this 3. bond investment? Solution: Requirement 1 Date Accounts and Explanation 2016 Jan. 2 Long-term investments - Held to Maturity Cash Purchased investment in bonds Jun. 30 Cash Debit Credit 80,000 80,000 (a) Interest Revenue Received cash interest Dec. 31Cash (a) (a) Interest Revenue Received cash interest (a) Calculations: (a) Semiannual interest= Face (par) value x annual stated rate payment received = ?? X 4% x 1/2 = (a) Chapter 10: Investments 1/2 Page 3 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Requirement 2 League up will receive cash interes of _________ each year from CoccoCorp. Total cash interest received each year S = emiannual cash interest received x 2 = (a) x 2 = ?? Alternatively: Total cash interest received each year =Face (par) value x Annual stated rate = ?? X 4% = ?? Requirement 3 Chapter 10: Investments Page 4 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-11 Requirements 1. Journalize Dollar Bill's investment transactions. Explanations are not required. 2. Classify and prepare partial financial statements for Dollar Bill's Microscape investment as of December 31, 2016. Assume Creative Investment's net income for the year is $40,000. Solution: Requirement 1 Date Accounts and Explanation 2016 Jan. 14 Long-Term Investments -- Available-for-Sale Cash Debit Credit (a) (a) Aug. 22 Cash (b) Dividend Revenue (b) Dec. 31 Unrealized Holding Loss -- Available-for-sale Fair Value Adjustment -- Available-for-sale Dec. 31 No entry required Calculations: (a) Total cost (b) Dividend Received Chapter 10: Investments = Number of shares = 200 shares = (a) x Price per share x ?/share = Number of shares = 200 shares = (b) x Dividend per share x ?/share Page 5 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition ( c) Unrealized holding loss = Total fair value = (d) = XX (d) Total fair value Total cost 10400 = number of shares x market value (fair value) per share = xx shares x $47/share = XX (e) For available-for-sale investments, net income earned by the investee is not recroded by the investor. Requirement 2 DOLLAR BILL INVESTMENTS Balance Sheet (Partial) December 31, 2016 Assets Long-term investments -- available-for-sale (at fair value: cost $10,400 (a)) (d) Stockholders' Equity Accumulated other comprehensive Income: Unrealized holding loss -- available-for-sale investments ( c) DOLLAR BILL INVESTMENTS Statement of Comprehensive Income For the Year Ended December 31, 2016 Net Income Other Comprehensive Income: Unrealized Holding Loss -- Available - for - Sale Investments Comprehensive Income Chapter 10: Investments $ 40,000 $ (c ) 39,000 Page 6 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-14 Requirements 1. What method should Westfall Motors use to account for the investment in Phase Motors? Give your reasoning. 2. Journalize all required 2016 transactions related to Westfall Motors' Phase investment. Include an explanation for each entry. 3. Post all 2016 transactions to the investment T-account. What is its balance after all the transactions are posted? How would this balance be classified on the balance sheet dated December 31, 2016? Solution: Requirement 1 Chapter 10: Investments Page 7 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Requirement 2 Date Accounts and Explanation 2016 Jan. 6 Long-Term Investments - Phase Motors Cash Purchased investment in stock (equity method) Cash Debit Credit 360,000,000 360,000,000 (a) Long-Term Investments - Phase Motors Received cash dividend (equity method) Long-Term Investments - Phase Motors Revenue from Investments Recorded revenue earned from investment (equity method) (a) (b) (b) Calculations: (a) Dividend received (b) Revenue from investmen Chapter 10: Investments = = = Total dividend paid by investee x x xx xx percentage of ownership 40% = = Net income earned by investee x xx x percentage of ownership 40% Page 8 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition = xx Requirement 3 Long-Term InvestmentsPhase Motors Jan. 6 360,000,000 (a) (b) Bal 358,000,000 Chapter 10: Investments Page 9 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-15 Requirements 1. Journalize Hartford Today's investment transactions. Explanations are not required. On December 31, 2016, how would the Golden stock be classified and 2. at what value would it be reported on the balance sheet? Solution: Requirement 1 Date 2016 Dec. 6 Dec. 23 Accounts and Explanation Debit Short-Term Investments - Trading Cash (a) Cash (b) Credit (a) Dividend Revenue Dec. 31 2017 Jan. 27 (b) Unrealized Holding Loss - Trading Fair Value Adjustment - Trading ( c) Cash Loss on Disposal Short-Term Investments - Trading (d) 440 ( c) (a) Calculations: (a) Total Cost Chapter 10: Investments = Number of Shares x x = xx shares = xx Price per share $22/share Page 10 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition (b) Total dividend received = Number of shares x x = xx shares = xx ( c) Unrealized holding los = = = (d) Total fair value (e) Loss on disposal Total fair value (d) xx - dividend per share $1.10 per share Total cost 24200 = 21 x 1100 shares = 23000 = Total cash receive (d) = xx total cost (a) Requirement 2 Chapter 10: Investments Page 11 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition not required. Chapter 10: Investments Page 12 of 13 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 10: Investments Page 13 of 13 E9-17 Determining the cost of assets Learning Objective 1 1. Land $365,000 Lavallee Furniture purchased land, paying $95,000 cash plus a $260,000 note payable. In addition, Lavallee paid delinquent property tax of $3,000, title insurance costing $2,000, and $5,000 to level the land and remove an unwanted building. The company then constructed an office building at a cost of $450,000. It also paid $55,000 for a fence around the property, $16,000 for a sign near the entrance, and $7,000 for special lighting of the grounds. Requirements 1. Determine the cost of the land, land improvements, and building. 2. Which of these assets will Lavallee depreciate? E9-27 Computing asset turnover ratio Learning Objective 6 Snap Dragon Photo reported the following figures on its December 31, 2016, income statement and balance sheet: Net sales $ 440,000 Dec. 31, 2016 Dec. 31, 2015 Cash $ 26,000 $ 28,000 Accounts Receivable 56,000 58,000 Merchandise Inventory 79,000 76,000 Prepaid Expenses 8,000 14,000 Property, plant, and equipment, net 180,000 11,000 Compute the asset turnover ratio for 2016. E9A-29 Measuring asset cost, units-of-production depreciation, and asset trade Learning Objectives 1, 2, 7 Appendix 9A 1. $12,870 Pact Trucking Corporation uses the unitsofproduction depreciation method because unitsofproduction best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company's fleet. When acquired in 2013, the rig cost $450,000 and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was $120,000. The truck was driven 82,000 miles in 2013, 122,000 miles in 2014, and 162,000 miles in 2015. After 39,000 miles, on March 15, 2016, the company traded in the Mack truck for a less expensive Freightliner. Pact also paid cash of $27,000. Fair market value of the Mack truck was equal to its net book value on the date of the trade. Requirements 1. Record the journal entry for depreciation expense in 2016. 2. Determine Pact's cost of the new truck. 3. Record the journal entry for the exchange of assets on March 15, 2016. Assume the exchange had commercial substance. E10-8 Accounting for bond investments Learning Objective 2 1. Jun. 30 Int. Rev. CR $2,250 Bennett purchased a bond on January 1, 2016, for $150,000. The bond has a face value of $150,000 and matures in 15 years. The bond pays interest on June 30 and December 31 at a 3% annual rate. Bennett plans on holding the investment until maturity. Requirements 1. Journalize the 2016 transactions related to Bennett's bond investment. Explanations are not required. 2. Journalize the transaction related to Bennett's disposition of the bond at maturity. Determine the date. (Assume the last interest payment has already been recorded.) Explanations are not required. E10-9 Accounting for bond investments Learning Objective 2 2. $32,000 League Up & Co. owns vast amounts of corporate bonds. Suppose League Up buys $800,000 of CocoCorp bonds at face value on January 2, 2016. The CocoCorp bonds pay interest at the annual rate of 4% on June 30 and December 31 and mature on December 31, 2033. League Up intends to hold the investment until maturity. Requirements 1. Journalize any required 2016 entries for the bond investment. 2. How much cash interest will League Up receive each year from CocoCorp? 3. How much interest revenue will League Up report during 2016 on this bond investment? E10-11 Accounting for stock investments Learning Objectives 3, 4 1. Dec. 31 Unrealized Holding LossAFS DR $1,000 Dollar Bill Investments completed these longterm, availableforsale investment transactions during 2016: Jan. Purchased 200 shares of Microscape stock, paying $52 per share. The 14 investment represents 4% ownership in Microscape's voting stock. Dollar Bill intends to hold the investment for the indefinite future. Aug. Received a cash dividend of $0.79 per share on the Microscape stock. 22 Dec. Adjusted the investment to its current market value of $47 per share. 31 31 Microscape reported net income of $400,000 for the year ended 2016. Requirements 1. Journalize Dollar Bill's investment transactions. Explanations are not required. 2. Classify and prepare partial financial statements for Dollar Bill's Microscape investment as of December 31, 2016. Assume Dollar Bill Investments' net income for the year is $40,000. E10-14 Accounting for stock investments Learning Objective 3 3. $358,000,000 Bal. Suppose that on January 6, 2016, Westfall Motors paid $360,000,000 for its 40% investment in Phase Motors. Assume Phase earned net income of $20,000,000 and paid cash dividends of $25,000,000 to all outstanding stockholders during 2016. (Assume all outstanding stock is voting stock.) Requirements 1. What method should Westfall Motors use to account for the investment in Phase Motors? Give your reasoning. 2. Journalize all required 2016 transactions related to Westfall Motors's Phase investment. Include an explanation for each entry. 3. Post all 2016 transactions to the investment T-account. What is its balance after all the transactions are posted? How would this balance be classified on the balance sheet dated December 31, 2016? E10-15 Classifying and accounting for stock investments Learning Objectives 1, 3, 4 1. Dec. 31 Fair Value AdjustmentTrading CR $1,100 Hartford Today Publishers completed the following trading investment transactions during 2016 and 2017: 201 6 Dec. Purchased 1,100 shares of Golden stock at a price of $22.00 per share, 6 intending to sell the investment next month. 23 Received a cash dividend of $1.10 per share on the Golden stock. 31 Adjusted the investment to its market value of $21.00 per share. 201 7 Jan. Sold the Golden stock for $21.60 per share. 27 Requirements 1. Journalize Hartford Today's investment transactions. Explanations are not required. 2. On December 31, 2016, how would the Golden stock be classified and at what value would it be reported on the balance sheet? FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E9-17 Requirements 1. Determine the cost of the land, land improvements, and building. 2. Which of these assets will Lavallee depreciate? Solution: Requirement 1 Purchase Price Note payable Property tax Title insurance Remove building Construct building Fence Sign Lighting $ Totals $ Land Land Improvements 95,000 260,000 3,000 2,000 5,000 $ 365,000 $ Building $ 450,000 78,000 $ 450,000 55,000 16,000 7,000 Requirement 2 We depreciate cost of assets over its useful life. The life of Land is not limited to period of time, So land being an fixed assets is not being depreciatied. Lavallee Furniture will only depreciate the cost of Building and Land Improvement Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 1 of 7 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 2 of 7 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E9-27 Compute the asset turnover ratio for 2016. Solution: Cash Accounts Receivable Merchandise Inventory Prepaid Expenses Property, Plant, and equipment, net Total Assets Asset turnover ratio = = = = = Dec. 31, 2016 $ 26,000.00 $ 56,000.00 $ 79,000.00 $ 8,000.00 $ 180,000.00 $ 349,000.00 Dec. 31 2015 $ 28,000.00 $ 58,000.00 $ 76,000.00 $ 14,000.00 $ 11,000.00 $ 187,000.00 Net sales / Average total assets $440000/ ((349000 + 187000) / 2) 440000 / 268000 1.64 times (rounded) 1.64 Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 3 of 7 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E9A-29 Requirements 1. Record the journal entry for depreciation expense in 2016. 2. Determine Pact's cost of the new truck. 3. Record the journal entry for the exchange of assets on March 15, 2016. Assume the exchange had commercial substance. Solution: Requirement 1 Depreciation per u= = = (cost-residual value) / useful life in units (450000 - 120000) / 1000000 miles 0.33 Per mile Units-of-productio= = = Depreciation per unit x current year usage 0.33 x 82000 miles $27060 in 2013 27060 = = = Depreciation per unit x current year usage 0.33 x 122000 miles $40260 in 2014 40260 = = = Depreciation per unit x current year usage (0.33 x 162000 Miles $53460 in 2015 53460 = = = Depreciation per unit x current year usage 0.33 x 39000 miles $12870 in 2016 12870 0.33 Total accumulated depreciation = all the years added up 133650 Date Accounts and Explanation Mar. 15 Depreciation Expense - Truck Chapter 9: Plant Assets, Natural Resources, and Intangibles Debit 12,870 Credit Page 4 of 7 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition 12,870 Accumulated Dep. - Truck To record depreication on truck Requirement 2 Market Value of assets received Less: Book Value of Asset Exchanged Cost Less: Accumulated Depreciation Cash Paid Gain or (loss) 343350 450,000 133650 = 316350 27000 343350 (27,000) Requirement 3 Date Accounts and Explanation Debit 15-Mar Truck (new) 343,350 Accumulated Depreciation 133,650 Truck (old) Cash Exchanged old truck and cash for new truck Chapter 9: Plant Assets, Natural Resources, and Intangibles Credit 450,000 27,000 Page 5 of 7 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 6 of 7 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition 343350 Chapter 9: Plant Assets, Natural Resources, and Intangibles Page 7 of 7 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-8 Requirements 1. Journalize the 2016 transactions related to Bennett's bond investment. Explanations are not required. 2. Journalize the transaction related to Bennett's disposition of the bond at maturity. Determine the date. (Assume the last interest payment has already been recorded.) Explanations are not required. Solution: Requirement 1 Date 2016 Jan. 1 Accounts and Explanation Debit Long-Term Investments -- Held-to-Maturity Cash Credit 150,000 150,000 Jun. 30 Cash 2250 Interest Revenue 2250 Dec. 31 Cash 2250 Interest Revenue 2250 Calculations: (a) Semiannual interest = Face (par) value Payment received = $ 150,000 2250 = $ 150,000 2250 Chapter 10: Investments Annual stated rate x 1/2 3% 1/2 3% 1/2 Page 1 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Requirement 2 Date Accounts and Explanation Debit 2030 Dec. 31 Cash 150,000 Long-term Investments -- Held to Maturity Chapter 10: Investments Credit 150,000 Page 2 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-9 Requirements 1. Journalize any required 2016 entries for the bond investment. 2. How much cash interest will League Up receive each year from CocoCorp? 3. How much interest revenue will League Up report during 2016 on this bond investment? Solution: Requirement 1 Date Accounts and Explanation 2016 Jan. 2 Long-term investments - Held to Maturity Cash Purchased investment in bonds Jun. 30 Cash Debit Credit 800,000 800,000 16000 Interest Revenue Received cash interest Dec. 31Cash 16000 16000 Interest Revenue Received cash interest 16000 Calculations: (a) Semiannual interest= Face (par) value x annual stated rate x payment received = 800000 X 4% x 1/2 = $ 16,000 Chapter 10: Investments 1/2 Page 3 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Requirement 2 League up will receive cash interes of $32,000 each year from CoccoCorp. Total cash interest received each year Alternatively: Total cash interest received each year = Semiannual cash interest received x 2 = 16000 x 2 = $ 32,000 = Face (par) value x Annual stated rate = 800000 X 4% = $ 32,000 Requirement 3 League Up will report $32,000 as Interest Revenue during 2016 Chapter 10: Investments Page 4 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-11 Requirements 1. Journalize Dollar Bill's investment transactions. Explanations are not required. 2. Classify and prepare partial financial statements for Dollar Bill's Microscape investment as of December 31, 2016. Assume Creative Investment's net income for the year is $40,000. Solution: Requirement 1 Date Accounts and Explanation 2016 Jan. 14 Long-Term Investments -- Available-for-Sale Cash Debit Credit 10400 10400 Aug. 22 Cash 158 Dividend Revenue 158 Dec. 31 Unrealized Holding Loss -- Available-for-sale Fair Value Adjustment -- Available-for-sale 1000 1000 Dec. 31 No entry required Calculations: (a) Total cost (b) Dividend Received Chapter 10: Investments = Number of shares = 200 shares = $ 10,400 x Price per share x 52/share = Number of shares = 200 shares = $ 158 x Dividend per share x 0.79/share Page 5 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition ( c) Unrealized holding loss = Total fair value = 9400 = $ -1,000 (d) Total fair value Total cost 10400 = number of shares x market value (fair value) per share = 200 shares x $47/share = $ 9,400 (e) For available-for-sale investments, net income earned by the investee is not recroded by the investor. Requirement 2 DOLLAR BILL INVESTMENTS Balance Sheet (Partial) December 31, 2016 Assets Long-term investments -- available-for-sale (at fair value: cost $10,400 (a)) Stockholders' Equity Accumulated other comprehensive Income: Unrealized holding loss -- available-for-sale investments 9400 $ -1,000 $ 40,000 $ -1000 39,000 DOLLAR BILL INVESTMENTS Statement of Comprehensive Income For the Year Ended December 31, 2016 Net Income Other Comprehensive Income: Unrealized Holding Loss -- Available - for - Sale Investments Comprehensive Income Chapter 10: Investments Page 6 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-14 Requirements 1. What method should Westfall Motors use to account for the investment in Phase Motors? Give your reasoning. 2. Journalize all required 2016 transactions related to Westfall Motors' Phase investment. Include an explanation for each entry. 3. Post all 2016 transactions to the investment T-account. What is its balance after all the transactions are posted? How would this balance be classified on the balance sheet dated December 31, 2016? Solution: Requirement 1 Investment must be accouted using equity method as the ownership is 40%. Westfall Motors should record the investment at cost at the time of purchase. When Dividend is received it is credited to Long term investment account, which means that dividend is treated as return of capital instead of earning on investment Chapter 10: Investments Page 7 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Requirement 2 Date Accounts and Explanation 2016 Jan. 6 Long-Term Investments - Phase Motors Cash Purchased investment in stock (equity method) Cash Debit Credit 360000000 360000000 10000000 Long-Term Investments - Phase Motors Received cash dividend (equity method) Long-Term Investments - Phase Motors Revenue from Investments Recorded revenue earned from investment (equity method) 10000000 8000000 8000000 Calculations: (a) Dividend received (b) Revenue from investmen Chapter 10: Investments = = = Total dividend paid by investee x $ 25,000,000 x $ 10,000,000 percentage of ownership 40% = = Net income earned by investee x $ 20,000,000 x percentage of ownership 40% Page 8 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition = 8000000 Requirement 3 Long-Term InvestmentsPhase Motors Jan. 6 360,000,000 10,000,000 8,000,000 Bal 358,000,000 $358000000 is the balance after all the transactions are posted It will be classified as a Long Term Assets on the balance sheet dated December 31, 2016 Chapter 10: Investments Page 9 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition oning. Chapter 10: Investments Page 10 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 10: Investments Page 11 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 10: Investments Page 12 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition E10-15 Requirements 1. Journalize Hartford Today's investment transactions. Explanations are not required. On December 31, 2016, how would the Golden stock be classified and at 2. what value would it be reported on the balance sheet? Solution: Requirement 1 Date 2016 Dec. 6 Dec. 23 Accounts and Explanation Short-Term Investments - Trading Cash Cash Debit Credit 24200 24200 1210 Dividend Revenue Dec. 31 2017 Jan. 27 Unrealized Holding Loss - Trading Fair Value Adjustment - Trading Cash Loss on Disposal Short-Term Investments - Trading 1210 1100 1100 23760 440 24200 Calculations: (a) Total Cost Chapter 10: Investments = Number of Shares x x = 1100 shares = $ 24,200 Price per share $22/share Page 13 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition (b) Total dividend received = = = Number of shares x x 1100 shares $ 1,210 dividend per share $1.10 per share ( c) Unrealized holding los = = = Total fair value $ 23,100 -1100 Total cost 24200 (d) Total fair value 21 x 1100 shares = 23000 (e) Loss on disposal = = Total cash received 23760 = -440 total cost 24200 Requirement 2 It should be classified under current assets as trade investments at its market value of $23100 Chapter 10: Investments Page 14 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition ot required. Chapter 10: Investments Page 15 of 16 FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Chapter 10: Investments Page 16 of 16 56) Complete the following statement: When a company invests in equity securities with 20% to 50% ownership in the investee's Voting stock, the investor can Significantly Influence the investee's decisions. These types of investments must be accounted for using the Equity method. 56) Complete the following statement: When a company invests in equity securities with 20% to 50% ownership in the investee's Voting stock, the investor can Significantly Influence the investee's decisions. These types of investments must be accounted for using the Equity method