Accounting for equity investments The beginning balance sheet of Waterfall Source Co. included a $400,000...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Accounting for equity investments The beginning balance sheet of Waterfall Source Co. included a $400,000 investment in Evan stock (20% ownership, Waterfall has significant influence over Evan). During the year, Waterfall Source completed the following investment transactions: Mar. 3 Purchased 4,000 shares at $11 per share of Lili Software common stock as a long-term equity investment, representing 7% ownership, no significant influence. May 15 Received a cash dividend of $0.61 per share on the Lili investment. Dec. 15 Received a cash dividend of $70,000 from Evan investment. 31 Received Evan's annual report showing $300,000 of net income. 31 Received Lili's annual report showing $120,000 of net income for the year. 31 Evan's stock fair value at year-end was $390,000. 31 Lili's common stock fair value at year-end was $12 per share. Requirements 1. Journalize the transactions for the year of Waterfall Source. 2. Post transactions to T-accounts to determine the December 31, 2018, balances related to the investment and investment income accounts. 3. Prepare Waterfall Source's partial balance sheet at December 31, 2018, from your answers in Requirement 2. 4. Where is the unrealized holding gain or loss associated with the Lili stock reported
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
