Posted: November 10th, 2015
Shares
Adam Corporation purchased 3,000 shares of Ozark Company’s common stock for $12 per
share as a long-term available-for-sale investment on June 30, 2014. Ozark declared
and paid a cash dividend of $1.00 per share on its common stock on September 30,
and ha
1. 1. Adam Corporation purchased 3,000 shares of Ozark Company’s common
stock for $12 per share as a long-term available-for-sale investment on June 30,
2014. Ozark declared and paid a cash dividend of $1.00 per share on its common
stock on September 30, and had a closing fair value of $18 per share on December
31. Assuming this investment is appropriately accounted for using the fair value
method, it will increase Adam’s 2014 income before taxes by:
2. 2. Clayton Inc. purchased 30% of the outstanding common stock of Austin
Industries on January 1, 2014, for $180,000. Austin reported net income of $70,000
for 2014 and declared and paid cash dividends on common stock of $30,000. The
amount of Clayton’s investment in Austin on December 31, 2014, should be:
3. 3. Pacific Company bought 35% of the outstanding common stock of Atlantic
Inc. on January 1, 2014, for $400,000. Atlantic reported net income of $200,000 for
2014 and declared and paid no dividends for the year. This investment was sold for
$500,000 on December 31, 2014. Pacific should report a gain on sale of this
investment on its 2014 income statement of:
4. 4. opper Inc. accounts for its investment in Ridge Corporation using the
fair value method. Copper bought 3,000 shares (5%) of Ridge’s outstanding common
stock for $28 per share on January 1, 2014. Ridge earned $3 per share for 2014,
declared and paid cash dividends of $1 per common share, and had a closing fair
value of $24 per share on December 31. The reported balance sheet value of Copper’s
investment in Ridge at December 31, 2014 is:
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