Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward thatend, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2021, for $440million.At the date of purchase, the book value of Vancouver's net assets was $795 million. The book values and fair values for all balancesheet items were the same except for Inventory and plant facilities. The fair value exceeded book value by $5 million for the Inventoryand by $30 million for the plant facilities.The estimated useful life of the plant facilities is 15 years. All Inventory acquired was sold during 2021.Vancouver reported net Income of $180 million for the year ended December 31, 2021. Vancouver paid a cash dividend of $50 million.Required:1. Prepare all appropriate journal entries related to the Investment during 2021.2. What amount should Northwest report as its Income from its Investment in Vancouver for the year ended December 31, 2021?3. What amount should Northwest report in its balance sheet as Its Investment in Vancouver?4. What should Northwest report in its statement of cash flows regarding its Investment in Vancouver?Complete this question by entering your answers in the tabs below.Req 1Req 2 and 3Prepare all appropriate journal entries related to the investment during 2021. (If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should beentered as 5.5).)View transaction list1Journal entry worksheet<2Req 4Record the entry related to the purchase.Note: Enter debits before credits.Transaction1Record entryGeneral JournalClear entry< Req 1DebitCreditView general JournalReq 2 and 3 > Req 1Req 2 and 3What amount should Northwest report as its income from its investment in Vancouver for the year ended December 31, 2021and in its balance sheet as its investment in Vancouver? (Enter your answers in millions rounded to 1 decimal place, (i.e.,5,500,000 should be entered as 5.5).)2.3. Balance sheet amountIncome statement amountReq 4millionmillion< Req 1Req 4 >

If a company purchases another company's shares with its own funds, the following rules apply: The…

1. Prepare all appropriate Journal entries related to the Investment during 2021. 2. What amount should Northwest report as its Income from Its Investment in Vancouver for the year ended December 31, 2021?

1. Prepare all appropriate Journal entries related to the Investment during 2021. 2. What amount should Northwest report as its Income from Its Investment in Vancouver for the year ended December 31, 2021?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2021, for $400 million. At the date of purchase, the book value of Vancouver’s net assets was $775 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value exceeded book value by $5 million for the inventory and by $20 million for the plant facilities. The estimated useful life of the plant facilities is 16 years. All inventory acquired was sold during 2021. Vancouver reported net income of $140 million for the year ended December 31, 2021. Vancouver paid a cash dividend of $30 million.Required:1. Prepare all appropriate journal entries related to the investment during 2021.2. What amount should Northwest report as its income from its investment in Vancouver for the…
Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold inCanada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber andMilling, Inc., on January 2, 2018, for $400 million.At the date of purchase, the book value of Vancouver’s net assets was $775 million. The book values and fairvalues for all balance sheet items were the same except for inventory and plant facilities. The fair value exceededbook value by $5 million for the inventory and by $20 million for the plant facilities.The estimated useful life of the plant facilities is 16 years. All inventory acquired was sold during 2018.Vancouver reported net income of $140 million for the year ended December 31, 2018. Vancouver paid acash dividend of $30 million.Required:1. Prepare all appropriate journal entries related to the investment during 2018.2. What amount should Northwest report as its income from its investment in Vancouver for the year…
Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2016, for $400 million. At the date of purchase, the book value of Vancouver’s net assets was $775 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value exceeded book value by $5 million for the inventory and by $20 million for the plant facilities. The estimated useful life of the plant facilities is 16 years. All inventory acquired was sold during 2016. Vancouver reported net income of $140 million for the year ended December 31, 2016. Vancouver paid a cash dividend of $30 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2016. 2. What amount should Northwest report as its income from its investment in Vancouver for…
Leo Corporation acquired 100 percent of the common stock of a British company on January 1, 2019, for $137800. Leo determined that the Great Britain Pound was the functional currency. On December 31, 2019, the British subsidiary's adjusted trial balance, translated into U.S. dollars, contained $19500 more debits than credits. The British subsidiary reported income of 93400 pounds for 2019 and paid a cash dividend of 32500 pounds on October 25, 2019. Leo uses the fully adjusted equity method of accounting for its investment. Exchange rates at various dates during 2019 follow: January 1 1£ = 1.21 October 25 1£ = 1.24 December 31 1£ = 1.27 Average for the year 1f = 1.23 Based on the preceding information, the receipt of the dividend will result in a credit to the investment account in the amount of: BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000. Your Answer:
Par Corporation, a Canadian company, purchased 80% of the outstanding shares of Sub Company of Germany on December 31, Year 5 for €3,000,000 Euros. At that date, the carrying values of Sub’s assets and liabilities were equal to fair values. There was a goodwill impairment loss in Year 6 of €10,000. The fiscal Year 5 financial statements of Sub were as follows: Sub Company Balance Sheet December 31, Year 5 Cash € 500,000 Accounts receivable 900,000 Inventory 1,200,000 Capital assets (net) 3,250,000 € 5,850,000 Accounts payable € 650,000 Bonds payable 1,700,000 Common shares 2,000,000 Retained earnings 1,500,000 € 5,850,000 Par anticipated that there would be a high volume of intercompany transactions with Sub, because Par provides the raw materials to Sub and sales are global. Also Sub obtained most of its financing thru banks in Canada. Par uses the cost method to account for its investment in Sub. The fiscal Year 6 financial statements of Par and Sub were as follows: Balance Sheets…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 76,000 pounds. The subsidiary immediately borrowed 180,000 pounds on a five-year note with 6 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 256,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,400 pounds per month. By year-end, rent payments totaling 84,000 pounds had been received, and 16,800 pounds was in accounts receivable. On October 1, 2020, 3,200 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,800 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 73,000 pounds. The subsidiary immediately borrowed 146,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 219,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,100 pounds per month. By year-end, rent payments totaling 81,000 pounds had been received, and 16,200 pounds was in accounts receivable. On October 1, 2020, 3,000 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 13,200 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 94,000 pounds. The subsidiary immediately borrowed 225,000 pounds on a five-year note with 9 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 319,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,850 pounds per month. By year-end, rent payments totaling 88,500 pounds had been received, and 17,700 pounds was in accounts receivable. On October 1, 2020, 4,100 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,575 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 69,000 pounds. The subsidiary immediately borrowed 146,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 215,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 4,200 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 13,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…