Would this investment be classified on florists

Assignment Help Accounting Basics
Reference no: EM13996116

As a long-term investment at the beginning of the fiscal year, Florists International purchased 30% of Nursery Supplies Inc.'s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. The company realizes that this investment typically would be accounted for under the equity method, but instead chooses the fair value option. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.25 per share. At the end of the year, the fair value of the shares is $52 million.

Required:

1. Would this investment be classified on Florists' balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other? Explain.

2. Prepare all appropriate journal entries related to the investment during 2011.

3. Indicate the effect of this investment on 2011 income before taxes. 

Reference no: EM13996116

Questions Cloud

Elementary school quality from residential property values : The table on federal income tax rates facing various income groups suggests that the marginal tax rate in the United States has fallen. What would be your prediction as to how this decline in marginal tax rates could affect the quantity of Labor supp..
Why are sn1 reactions not considered stereospecifc : Why are SN1 reactions not considered stereospecifc, in contrast with SN2 reactions?
Faced by a firm in oligopolistic competition : Describe the demand and marginal revenue curves faced by a firm in a purely competitive market. Are they different from those faced by a firm in oligopolistic competition? If so, why?
Experienced substantial decrease in the amount of garbage : Many cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a tax on each household to pay for the pickup to charging a fee for each bag or can picked up. Would this have been the resul..
Would this investment be classified on florists : Would this investment be classified on Florists' balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other? Explain.
Encourage research and development in competitive industries : If all the assumptions of perfect competition hold, why would firms in such an industry have little incentive to carry out technological change or much research and development? What conditions would encourage research and development in competitive ..
Prepare the appropriate journal entry : Prepare the appropriate 2011 journal entry to record insurance expense and the increase in the investment assuming the cash surrender value of the policy increased according to the contract to $27,000.
Ford corporation owns a whole life insurance policy : Petroleum Corporation received a $250,000 life insurance settlement when its CEO died. At that time, the cash surrender value was $16,000.
About the policies and politics : "There is no difference between demand pull and cost push inflation since either will result in inflation." Do you agree? Why or why not? Be specific and limit your response to one paragraph.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepaid rent-quarterly adjustments

On September 1, Northhampton Industries signed a six-month lease for office space, which is effective September 1. Northhampton agreed to prepay the rent and mailed a check for $12,000 to the landlord on September 1. Assume that Northhampton prepa..

  Annual salary from moveable feast

Annual salary from Moveable Feast

  The standard cost of product b manufactured by tlc company

the standard cost of product b manufactured by tlc company includes 3 unit s of direct materials at 6.75 per unit

  Your uncle promises to give you 500 per quarter for the

your uncle promises to give you 500 per quarter for the next five years. how much is his promise worth right now if the

  Expenses incurred in applying for the cfo chief financial

comment on the deductibility of each of the following itemsa. gambling losses in excess of gambling gains. taxpayer is

  Determine the amount of actual bad debt write-offs made

aldos financial statements for the 2010 and 2009 fiscal years contained the following informationbalance sheets in

  Determine the break-even point in units of q and z

The sales mix for products Q and Z is 20% and 80%, respectively. Determine the break-even point in units of Q and Z.

  Finding future employment

How can participating in groups help you in not only succeeding in your current job but help you in finding future employment?

  Concept of straight-line amortization

Menke uses straight-line amortization. Ignoring income taxes, the amount reported in Menke's 2010 income statement from this investment should be $4,500.

  Example of an internal user of accounting information

Which of the following is an example of an internal user of accounting information?

  Glass doctor company manufactures sunglasses following is a

glass doctor company manufactures sunglasses. following is a list of costs the company incurred during may. use the

  Describe amp explain three characteristics of payroll

describe amp explain three characteristics of payroll related taxes that make accounting for them so time consuming for

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd