Additional Problem 7 (a1) Additional Problem 7 Following is a summary of the inv

Question

Additional Problem 7

(a1)

Additional Problem 7

Following is a summary of the investments owned by Kingbird Corporation, as of January 1, 2017:
Investment Percentage of
Outstanding Shares Kingbird’s Intention STG Corporation 5% To be sold when prices increase Brach Ltd. 32% Buy additional shares to achieve control of company.
Kingbird has members on Brach’s Board of Directors. Raptor Inc. 1% To be sold when prices increase CMP Ltd. 22% Hold indefinitely. Another company owns the remaining 78% of shares Diloph Inc. 6% Hold indefinitely
During 2017, the various companies paid dividends at various times throughout the year, as follows:
Investment Kingbird’s Share of
Dividends STG Corporation $6,000 Brach Ltd. 22,000 Raptor Inc. 2,000 CMP Ltd. 15,000 Diloph Inc. 4,000

Explanation / Answer

STG Corporation FV-NIFV-NI SInce the securities is intented to be sold as and when price is increased to earn short term profit therefore it is classified as trading securities. Brach Ltd. Equity method since there is a significant influence (having board members) therefore equity method is appropriate Raptor Inc. FV-NIFV-NI SInce the securities is intented to be sold as and when price is increased to earn short term profit therefore it is classified as trading securities. CMP Ltd. Equity method since the holding is more than 20% ,there is a significant influence ,equity methos is appropriate Diloph Inc. Cost method Intention is to hold securities indefinetly .

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.