After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches
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36
On June 1, 2020, Ping Corp. purchased 10,000 of Pong’s 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong’s shares was P6.50 per share on December 31, 2020.
Which statement is correct?
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- On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.Monona Company reported net income of 29,975 for 2019. During all of 2019, Monona had 1,000 shares of 10%, 100 par, nonconvertible preferred stock outstanding, on which the years dividends had been paid. At the beginning of 2019, the company had 7,000 shares of common stock outstanding. On April 2, 2019, the company issued another 2,000 shares of common stock so that 9,000 common shares were outstanding at the end of 2019. Common dividends of 17,000 had been paid during 2019. At the end of 2019, the market price per share of common stock was 17.50. Required: 1. Compute Mononas basic earnings per share for 2019. 2. Compute the price/earnings ratio for 2019.Anoka Company reported the following selected items in the shareholders equity section of its balance sheet on December 31, 2019, and 2020: In addition, it listed the following selected pretax items as a December 31, 2019 and 2020: The preferred shares were outstanding during all of 2019 and 2020; annual dividends were declared and paid in each year. During 2019, 2,000 common shares were sold for cash on October 4. During 2020, a 20% stock dividend was declared and issued in early May. At the end of 2019 and 2020, the common stock was selling for 25.75 and 32.20, respectively. The company is subject to a 30% income tax rate. Required: 1. Prepare the comparative 2019 and 2020 income statements (multiple-step), and the related note that would appear in Anokas 2020 annual report. 2. Next Level Compute the price/earnings ratio for 2020. How does this compare to 2019? Why is it different?
- Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of 2019, Tama had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of 80,000 and were issued in 2016 at par. Each 1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds have been converted. During 2019, the company earned net income of 79,200 and was subject to an income tax rate of 30%. Required: Compute the 2019 diluted earnings per share.Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight line method) and dividends on each security during 2019. Each of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.On June 1, 2020, Ping Corp. purchased 10,000 of Pong's 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong's shares was P6.50 per share on December 31, 2020. Which statement is correct? O Assuming that the investment is FVTPL, the total effect on Ping's profit or loss for the year ended December 31, 2020 is P2,500 O Assuming that the investment is FVTOCI, the total effect on Ping's profit or loss for the year ended December 31, 2020 is P7,500. O Assuming that the investment is an associate, the total effect on Ping's profit or loss for the year ended December 31, 2020 is P3,600. O After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches.
- 5. On June 1, 2020, Ping Corp. purchased 10,000 of Pong’s 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong’s shares was P6.50 per share on December 31, 2020. Which statement is correct? Group of answer choices After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches. Assuming that the investment is FVTPL, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P2,500. Assuming that the investment is FVTOCI, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P7,500. Assuming that the investment is an associate, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P3,600.6. On January 1, 2020, PQR Company purchased 40,000 shares of Frank, Inc. at P100 per share. The investment is measured at fair value through other comprehensive income. Brokerage fees amounted to P120,000 were also paid by PQR. A P5 dividend per share was declared by Frank, Inc. on December 15, 2019, to be paid on March 31, 2020 to shareholders of record on January 31, 2020. What is the initial measurement of the investment in Frank, Inc.?6. On January 2, 2020, Theodora Company purchased 40,000 shares of Byzantine, Inc. stock at P100 per share. Brokerage fees amounted to P120,000. A P5 dividend per share of Byzantine, Inc. shares had been declared on December 15, 2019, to be paid on March 31, 2020 to shareholders of record on January 31, 2020. The shares are designated as FVTOCI. On December 31, 2020 the investment has a fair value of P4,200,000. How much should be recognized in the 2020 other comprehensive income related to these securities? Group of answer choices P280,000 P200,000 P400,000 P80,000
- ABC Co. purchased 10,000 shares (2% ownership) of DEF Co. on February 14, 2020. ABC Co. received a share dividend of 2,000 shares on April 30, 2020, when the market value per share was P35. DEF Co. paid a cash dividend of P2 per share on December 15, 2020. In its 2020 income statement, what amount should ABC Co. report as dividend income?On January 15, 2020 bieber co purchased 30,000 shares of Hand Co. at $35 per share, paying $10,000 in commissions to the broker of the deal. On March 17, 2020, Hand Co. paid a cash dividend of $2.50 per share. The fair value of the Hand Co. stock at the end of 2020 was $38 per share. During 2020, Hand Co. had net income of $3,000,000. Prepare the journal entries for Bieber Co. for the above transaction assuming the amount of shares purchased represents 40% of Hand Co. outstanding stock.On July 1, 2021, JKJ Corporation purchased 100 common shares of JMK Ltd. at $20 per share. JKJ expected to be able to sell this investment within a year at $28 per share. Dividends of $1 per share were declared and paid on August 1, 2021. On December 31, 2021, the fair value of each share was $23. What balance was shown in the investment account on JKJ's balance sheet on December 31 (year end)? $2,300 $2,400 $2,000 $2,800