108) The DEML Corporation reported the following transactions for the year 2010:
Jan.1Purchased 35% of the common shares of Utilities Board Corporation for $700,000.
This is a long-term investment giving DEML significant influence over the operations of Utilities Board.
Sept. 30Received a $42,000 dividend on the Utilities Board Corporation stock.
Dec. 31Utilities Board Corporation reported net income of $176,200 for the year ended December 31, 2010.
Dec. 31DEML sold 50% of the Utilities Board shares for $400,000.
Prepare journal entries to record all the above events for the DEML Corporation.
109) On January 1, 2010, Red Deer Corporation paid $360,000 to purchase 32% of the outstanding voting stock of English Court Corporation. The equity method is used to account for the investment. The following data relate to this investment.
2010
?Dividends received from English Court Corporation amounted to $20,000.
?Net income reported by English Court Corporation was $290,000.
?Current market value of English Court Corporation investment on December 31, 2010, was $365,000. 2011
?Dividends received from English Court Corporation amounted to $30,000.
?Net income reported by English Court Corporation was $320,000.
?Current market value of English Court Corporation investment on December 31, 2011, was $430,000.
?The investment was sold on December 31, 2011, for $430,000.
Prepare all journal entries for 2010 and 2011 relating to Red Deer Corporation's investment in English Court Corporation.
110) PET Corporation purchased 225,000 shares of SOX Corporation on January 1, 2011, for $540,000. SOX Corporation has 600,000 shares outstanding. SOX Corporation earned net income of $360,000 and paid dividends of $106,000 during 2011.
Required:
a.What method should be used to account for the SOX Corporation investment?
b.How much revenue will be recorded by PET Corporation in 2011 from its investment in SOX Corporation?
c.What is the balance in PET's investment account at the end of 2011?
d.Assume all of the above facts except that on January 1, 2011, PET Corporation purchased 90,000 shares of SOX Corporation. How much revenue will be recorded by PET Corporation in 2011 from its investment in SOX Corporation?
111) An investor owns 40% of the voting common shares in an investee and has the ability to exercise significant influence over the investee. How should the investor account for the investment?
112) How does a company such as ATCO Ltd. report the results of its diverse worldwide lines of business?