TBSFWB$0211$ Financial Statement Disclosures

Harold Johnson, an investor in Acme Co$.,$ asked you for advice on the propriety of Acme's financial reporting for two of its investments. You obtained the following information related to the investments from Acme's December $31,$ Year $1$ financial statements:

$20\%$ ownership interest in Kern Co$.,$ represented by $200,000$ shares of outstanding common stock purchased on January $2,$ Year $1,$ for $$600,000.$

$20\%$ ownership interest in Wand Co$.,$ represented by $20,000$ shares of outstanding common stock purchased on January $2,$ Year $1,$ for $$300,000.$

On January $2,$ Year $1,$ the carrying values of the acquired shares of both investments equaled their purchase price.

Kern reported earnings of $$400,000$ for the year ended December $31,$ Year $1,$ and declared and paid dividends of $$100,000$ during Year $1.$

Wand reported earnings of $$350,000$ for the year ended December $31,$ Year $1,$ and declared and paid dividends of $$60,000$ during Year $1.$

On December $31,$ Year $1,$ Kern's and Wand's common stock were trading over$-$the$-$counter at $$18$ and $$20$ per share, respectively.

Acme can exercise significant influence over Kern; therefore the investment in Kern is accounted for using the equity method.

Acme cannot exercise significant influence over Wand; therefore the investment in Wand is accounted for at fair value.

Identify the amounts that would be reported on Acme's December $31,$ Year $1,$ financial statements for the investment in Kern and Wand. Click on the corresponding cells and enter the amount to be reported. Do not use dollar signs but do use commas for thousands: e$.$g$.,1000,000.$ If no other amount is required, enter $"0."$

Balance Sheet

Carrying value of Kern investment

Carrying value of Wand investment

Income on Income Statement

Kern investment

Wand investment

Other comprehensive income

Kern investment

Wand investment