Suppose MyPlace owns the following investments at December 31, 2012: a. 100% of the common stock of

Question:

Suppose MyPlace owns the following investments at December 31, 2012:
a. 100% of the of MyPlace United Kingdom, which holds assets of £600,000 and owes a total of £400,000. At December 31, 2012, the current of the pound (£) is £1 = $1.97. The translation rate of the pound applicable to stockholders’ equity is £1 = $1.63. During 2012, MyPlace United Kingdom earned net income of £75,000, and the average for the year was £1 = $1.89. MyPlace United Kingdom paid cash dividends of £40,000 during 2012.
b. Investments that MyPlace is holding to sell. These investments cost $550,000 and declined in value by $250,000 during 2012, but they paid cash dividends of $25,000 to MyPlace. One year ago, at December 31, 2011, the fair value of these investments was $900,000.
c. 35% of the of MyPlace Financing Associates. During 2012, MyPlace Financing earned net income of $900,000 and declared and paid cash dividends of$80,000. The carrying amount of this investment was $700,000 at December 31, 2011.

Requirements
1. Which method is used to account for each investment?
2. By how much did each of these investments increase or decrease MyPlace’s net income during 2012?
3. For investments b and c, show how MyPlace would report these investments on its at December 31, 2012.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...