Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Xavier Funds, Inc. purchases 15,000 shares of Mesa Petroleum Corporation on January 1, 2020, at $105 per share. Mesa Petroleum reports 2020 net income of

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Xavier Funds, Inc. purchases 15,000 shares of Mesa Petroleum Corporation on January 1, 2020, at $105 per share. Mesa Petroleum reports 2020 net income of $450,000 and declares and pays a cash dividend of $6 per share during 2020. Mesa Petroleum's stock is trading at $126 per share as of 12/31/20. Xavier Funds shows the net of all investment-related revenues and expenses as 'Investment Income, ne on its Income Statement. Assume that when Xavier purchases its shares in Mesa Petroleum, Mesa has 100,000 total outstanding common shares so Xavier accounts for its investment in Mesa using the FAIR VALUE Method. What is the balance shown for "Investments" on Xavier's 12/31/20 Balance Sheet? $1,710,000 $1,575,000 $1,890,000 $1,620,000 Assume that when Xavier purchases its shares in Mesa Petroleum, Mesa has 100,000 total outstanding common shares so Xavier accounts for its investment in Mesa using the FAIR VALUE Method. What is the balance shown for "Investment Income, net" on Xavier's 2020 Income Statement? $315,000 $472,500 $90,000 $405,000 The NEW part: Assume that when Xavier purchases its shares in Mesa Petroleum, Mesa instead has 50,000 total outstanding common shares so Xavier accounts for its investment in Mesa using the EQUITY Method. What is the balance shown for "Investments" on Xavier's 12/31/20 Balance Sheet? $1,710,000 $1,890,000 $1,575,000 $1,620,000 Assume that when Xavier purchases its shares in Mesa Petroleum, Mesa has 50,000 total outstanding common shares so Xavier accounts for its investment in Mesa using the EQUITY Method. What is the balance shown for "Investment Income, net' on Xavier's 2020 Income Statement? $540,000 $135,000 $225,000 $90,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Finance, European Edition

Authors: Peter Moles, Robert Parrino, David S. Kidwell

1st Edition

0470683708, 9780470683705

More Books

Students also viewed these Accounting questions

Question

Describe the complexity (order) of insertion into a B-tree.

Answered: 1 week ago

Question

What are the advantages of arbitration?

Answered: 1 week ago