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Business, 05.05.2020 08:00 queenasiaa14

Company A purchased a certain number of Company B's outstanding voting shares at $20 per share as a long term investment. Company B had outstanding 20,000 shares of 410 par value stock. Complete the following table relating to the measurement and reporting by Company A after acquisition of the shares of Company B stock.

Fair Value Equity Method
Method
A. What level of ownership by Company A of
Company B is required to apply the method? ?% ?%

***For B, e, F, and g assume the following:
Number of shares acquired of Company B stock 2,500 7,000
Net income reported by Company B in first year 59,000 59.000
Dividends declared by Company B in first year 12,000 12,000
Market price at end of first year, Company B stock 17 17

B. At acquisition, the investment account on the books
of Company A should be debited at what amount?

C. When should Company A recognize revenue earned
on the stock of Company B? Explanation required.

D. After the acquisition date, how should Company A
change the balance of the investment account with
respect to the stock owned in Company B (other than
for disposal of the investment)? Explanation required.

E. What is the balance in the investment account on
the balance sheet of Company A at the end of the
first year?

F. What amount of revenue from the investment in
Company B should Company A report at the end of
the first year?

G. What amount of unrealized loss should Company A report
at the end of the first year?

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