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Q2. a) Microsoft owns equity-method investments in several companies. Suppose Microsoft paid $1,000,000 to acquire a 25% investment in Sun - Software Company. Sun -
Q2. a) Microsoft owns equity-method investments in several companies. Suppose Microsoft paid $1,000,000 to acquire a 25% investment in Sun - Software Company. Sun - Software reported net income of $640,000 for the first year and declared and paid cash dividends of $420,000. i) Record the following in Microsoft's journal: (a) Purchase of the investment, (b) Microsoft's proportion of Sun Software's net income (c) Receipt of the cash dividends. ii) What is the ending balance in Microsoft's investment account? b) You are required to identify whether the following bonds will be issued at face value, a premium, or a discount: 1. The market interest rate is 9%. Moonlight Inc. issues bonds with a stated rate of 8.5% 11. Skyrocket Corporation issued 7.5% bonds when the market rate was 7.5%. 111 XSpace Corporation issued 8 bonds when the market interest rate was 6.75%. iv. TV Company issued bonds that pay cash interest at the stated interest rate of 7%. At the date of issuance, the market interest rate was 8.25%
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