On 30 April 20X2, Marc Company purchased 4,800 shares of Spencer Ltd. for $29 per share plus $480 in commission. In 20X2, thecompany received a $0.80 per share dividend, and the shares had a fair value of $24 per share at the end of the year. In 20X3, thedividend was $1.60 per share, and the fair value was $33 per share at the end of the year. In 20X4, the shares were sold for $32 pershare less a $600 commission.Required:1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)a. Cost method.EarningsDividend revenueFees and commissionsGain on saleStatement of financialpositionInvestmentOCI: Holding gain/(loss)SS$20x220X33,849$ 7,6800$0 S000$ 139,680 $ 139,680$0$S$20X40014,520 X00 b. FVTPL method.EarningsDividend revenueFees and commissionsHolding gains (losses)Statement of financialpositionInvestmentOCI: Holding gain/(loss)EarningsDividend revenueFees and commissionsHolding gains (losses)Statement of financialpositionInvestmentOCI: Holding gain/(loss)Transfer to Retained20X2$ 3,840 $0X $Earnings(24,480) X$ 115,200 $ 158,4000 $$20X23,840 $$0020X3c. FVOCI-Equity method; realized amounts are transferred to retained earnings.$ 115,200(24,480)7,680043,200020X37,68000$ 158,40043,2000 $0$$$$20X4004,200 X20X40014,52018,72018,720"Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

1. Introduction: a. Under Cost method, Investments will be intially measured and recorded at…

On 30 April 20X2, Marc Company purchased 4,800 shares of Spencer Ltd. for $29 per share plus $480 in commission. In 20X2, the company received a $0.80 per share dividend, and the shares had a fair value of $24 per share at the end of the year. In 20X3, the dividend was $1.60 per share, and the fair value was $33 per share at the end of the year. In 20X4, the shares were sold for $32 per share less a $600 commission. Required: 1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and 20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)

On 30 April 20X2, Marc Company purchased 4,800 shares of Spencer Ltd. for $29 per share plus $480 in commission. In 20X2, the company received a $0.80 per share dividend, and the shares had a fair value of $24 per share at the end of the year. In 20X3, the dividend was $1.60 per share, and the fair value was $33 per share at the end of the year. In 20X4, the shares were sold for $32 per share less a $600 commission. Required: 1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and 20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

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On 30 April 20X2, Marc Company purchased 4,000 shares of Spencer Ltd. for $17 per share plus $400 in commission. In 20X2, the company received a $0.65 per share dividend, and the shares had a fair value of $16 per share at the end of the year. In 20X3, the dividend was $1.05 per share, and the fair value was $20 per share at the end of the year. In 20X4, the shares were sold for $18 per share less a $550 commission. Required:1. Show the amounts and accounts that would be reported in earnings and the statement of financial position for 20X2, 20X3, and 20X4 if the company uses the: (Negative amounts should be indicated by minus sign.)a. Cost method. b. FVTPL method. c. FVOCI-Equity method; realized amounts are transferred to retained earnings.
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