k3s0504
Dec 12, 2010, 02:59 PM
I'm having trouble with the following problems:
1. Horne Corporation purchased 3,000 shares of Flynn Company's common stock for $12 per share as a long-term available-for-sale investment on June 30, 2011. Flynn 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 Horne's 2011 income before taxes by...
For this problem, I calculated:
3,000 x 12 = 36,000
36,000 - 3,000(1.00) = 33,000
Fair value: 3,000 x 18 = 54,000
Increase income by 54,000 - 33,000 = 21,000?
#2:
Merlin Inc. accounts for its investment in Tolan Corporation using the fair value method. Merlin bought 3,000 shares (5%) of Tolan's outstanding common stock for $28 per share on 1.1.2011. Tolan earned $3 per share foe 2011, 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 merlin's investment in tolan at 12.31.2011 is______
I have absolutely no clue where to even start for #2.
1. Horne Corporation purchased 3,000 shares of Flynn Company's common stock for $12 per share as a long-term available-for-sale investment on June 30, 2011. Flynn 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 Horne's 2011 income before taxes by...
For this problem, I calculated:
3,000 x 12 = 36,000
36,000 - 3,000(1.00) = 33,000
Fair value: 3,000 x 18 = 54,000
Increase income by 54,000 - 33,000 = 21,000?
#2:
Merlin Inc. accounts for its investment in Tolan Corporation using the fair value method. Merlin bought 3,000 shares (5%) of Tolan's outstanding common stock for $28 per share on 1.1.2011. Tolan earned $3 per share foe 2011, 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 merlin's investment in tolan at 12.31.2011 is______
I have absolutely no clue where to even start for #2.