What amount should parody report in its balance sheet

Assignment Help Accounting Basics

Reference no: EM132647521

Question -

1. Parody Corporation (Parody) was formed on January 1, 2006. Parody is 100% owned by Wesley Morgan. On January 1, 2019, the Company purchased 30% of Super Corporation's (Super) common stock for $330,000. (Super has no preferred stock.) Super is traded on the NYSE.

2. As a result, in 2019, Parody will begin to use the equity method of accounting with respect to Super.

3. On January 1, 2019, Super had a book value of $475,000. Super's book value in its equipment was $80,000 less than its fair market value. The equipment has a remaining life of ten years.

4. In 2020, Parody sold $100,000 of goods to Super with a gross profit rate of 40%. At December 31, 2020, Super had sold none of the goods to its customers.

5. Dividends are declared and paid in July each year.

6. During 2019 and 2020, Super reported the following:

Year	Net Income	Cash Dividends	FMV at 12/31
2019	$350,000	$200,000	$1,100,000
2020	$625,000	$240,000	$2,200,000

Required -

1. In 2020, what income did Parody report from its investment in Super?

2. On Parody's comparative financial statements for 2019 and 2020, what amount should Parody report in its balance sheet in connection with this investment?

3. What are all necessary journal entries for Parody with respect to Super for 2020?

Reference no: EM132647521

Questions Cloud

Psychological skills and executive coaching : Executive coaching has only recently emerged as a professional field. What is the connection between psychological-mindfulness and executive coaching?

Magnitude of magnetic field at center of the coil : Find the magnitude of the magnetic field at the center of the coil that is produced by the induced current.

What is the amount of interest income on december : X Co., received a 5-month note from a customer amounting to P500,000, 10% interest. What is the amount of interest income on December 31, 2009?

Discuss some of problems or dangers in project networks : Discuss some of the problems or dangers in using project networks. Under what circumstances can they be beneficial, and when can they be dangerous?

What amount should parody report in its balance sheet : On Parody's comparative financial statements for 2019 and 2020, what amount should Parody report in its balance sheet in connection with this investment

Climate change influence human society : How does climate change influence human society? What is the difference between weather and climate?

How to obtain financial statements and other types : How to Obtain financial statements and other types of disclosures for 3 large publicly held banks in the United States. Analyze the disclosures for presence

Analyze the disclosures for presence of collaterized loan : Analyze the disclosures for presence and holdings of Collaterized Loan Obligations investments. Assess their riskiness to the bank's solvency.

Coefficient of kinetic friction between block and floor : If the tension in the cable is 5.0 N, what is the coefficient of kinetic friction between the block and the floor?

User Account

All Pages