Question :
51.On January 2, 2015, Pfizer Co. purchased 22% of Wiley : 1241893
51.On January 2, 2015, Pfizer Co. purchased 22% of Wiley Company’s voting stock for $150,000. During 2015, Wiley recorded income of $102,000 and paid total dividends of $27,000. Pfizer uses the equity method to account for this investment. What is Pfizer’s income from the Wiley investment?
a.$27,000
b.$28,380
c.$22,440
d.$33,000
52.On January 2, 2015, Pfizer Co. purchased 22% of Wiley Company’s voting stock for $150,000. During 2015, Wiley recorded income of $102,000 and paid total dividends of $27,000. Pfizer uses the equity method to account for this investment. What is the December 31, 2015, balance sheet value of its long-term equity investment in Wiley?
a.$178,380
b.$225,000
c.$150,000
d.$166,500
53.If Howard Company’s balance sheet amount of goodwill is $20,000 and the fair market value of the goodwill is estimated to be $25,000, which of the following entries would be recorded in Howard’s books?
a. Goodwill 5,000
Goodwill Market Gain 5,000
b. Goodwill Market Gain 5,000
Goodwill 5,000
c. Goodwill impairment Charge 5,000
Goodwill 5,000
d. No entry will be made.
54.On December 31, 2015, available-for-sale securities with an original cost of $15,000 have a carrying value on the balance sheet equal to their market value of $20,000. On January 5, 2016, those securities are sold for $18,000. Which of the following would be part of the appropriate entry to record the sale of the available-for-sale securities?
a.A credit to Realized Gain on Available-for-Sale Securities for $5,000.
b.A debit to Unrealized Price Increase on Available-for Sale Securities for $3,000.
c.A debit to Unrealized Price Increase on Available-for Sale Securities for $5,000.
d.A credit to Available-for Sale Securities for $15,000.
55.On January 2, 2015, Dellgate Corp. purchased 27% of Galaxy Corporation’s voting stock for $125,000. During 2015, Galaxy recorded income of $214,000 and paid total dividends of $17,000. Dellgate uses the cost method to account for this investment. What is the December 31, 2015, balance sheet value of Dellgate’s long-term equity investment in Galaxy?
a.$125,000
b.$178,190
c.$187,370
d.$86,940
56.The following information related to the marketable security investments of Solo Company. Securities held on December 31, 2014, as described in the table below. AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.
Securities
No. of Shares
Cost/Share
Total Cost
Value/Share
Total Market Value
AAA
100
$29
$2,900
$34
$3,400
BBB
250
30
7,500
28
7,000
CCC
150
16
2,400
20
3,000
$12,800
$13,400
Early in 2015, Solo sold all of its investment in AAA securities for $36 per share.
The journal entry to record the 2015 revaluation of the AAA securities would be:
a.Trading Securities500
Unrealized Gain on Trading Securities500
b.Unrealized Loss on Trading Securities 500
Trading Securities500
c.Unrealized Loss on Trading Securities 500
Cash500
d.Trading Securities 500
Realized Gain on Trading Securities 500
57.The following information related to the marketable security investments of Solo Company. Securities held on December 31, 2014, as described in the table below. AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.
Securities
No. of Shares
Cost/Share
Total Cost
Value/Share
Total Market Value
AAA
100
$29
$2,900
$34
$3,400
BBB
250
30
7,500
28
7,000
CCC
150
16
2,400
20
3,000
$12,800
$13,400
Early in 2015, the company sold 50 shares of BBB for $26 per share. During 2015, Solo received dividends of $3 per share on the remaining 200 shares of BBB. The per-share market value of BBB on December 31, 2015 was $24. During 2016, Solo sold the remaining 200 shares of BBB stock for $26 per share.
The journal entry to record the 2014 revaluation of the BBB securities would be:
a.Trading Securities500
Unrealized Gain on Trading Securities500
b.Unrealized Loss on Trading Securities 500
Trading Securities500
c.Unrealized Loss on Trading Securities 500
Cash500
d.Trading Securities 500
Realized Gain on Trading Securities 500
58.The following information related to the marketable security investments of Solo Company. Securities held on December 31, 2014, as described in the table below. AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.
Securities
No. of Shares
Cost/Share
Total Cost
Value/Share
Total Market Value
AAA
100
$29
$2,900
$34
$3,400
BBB
250
30
7,500
28
7,000
CCC
150
16
2,400
20
3,000
$12,800
$13,400
During 2015, Solo received word that dividends of $2.50 per share were declared, but not yet received on the 150 shares of CCC stock. The per-share market value of CCC on December 31, 2015, was $18. During 2016, Solo sold 150 shares of CCC for $22 per share.
The journal entry to record the 2014 revaluation of the CCC securities would be:
a.Available-for-Sale Securities600
Realized Gain on Available-for-Sale Securities600
b.Unrealized Loss on Available-for-Sale Securities600
Available-for-Sale Securities600
c.Realized Loss on Available-for-Sale Securities600
Available-for-Sale Securities600
d.Available-for-Sale Securities 600
Unrealized Price Increase on Available-for-Sale Securities600
59.The following information related to the marketable security investments of Solo Company. Securities held on December 31, 2014, as described in the table below. AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.
Securities
No. of Shares
Cost/Share
Total Cost
Value/Share
Total Market Value
AAA
100
$29
$2,900
$34
$3,400
BBB
250
30
7,500
28
7,000
CCC
150
16
2,400
20
3,000
$12,800
$13,400
Early in 2015, Solo sold all of its investment in AAA securities for $36 per share.
The journal entry to record the 100 shares of AAA stock sold in 2015 will include:
a.A debit to Trading Securities for $3,400.
b.A credit to Unrealized Loss on Trading Securities for $200.
c.A credit to Realized Loss on Sale of Trading Securities for $200.
d.A credit to Realized Gain on Sale of Trading Securities for $200.
60.The following information related to the marketable security investments of Solo Company. Securities held on December 31, 2014, as described in the table below. AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.
Securities
No. of Shares
Cost/Share
Total Cost
Value/Share
Total Market Value
AAA
100
$29
$2,900
$34
$3,400
BBB
250
30
7,500
28
7,000
CCC
150
16
2,400
20
3,000
$12,800
$13,400
Early in 2015, the company sold 50 shares of BBB for $26 per share.
The journal entry to record the 50 shares of BBB stock sold in 2015 will include:
a.A credit to Trading Securities for $1,400.
b.A credit to Unrealized Loss on Trading Securities for $100.
c.A credit to Realized Loss on Sale of Trading Securities for $100.
d.A debit to Realized Gain on Sale of Trading Securities for $100.
