Claire T.

Delvo

BLUSH COMPANY

Net income 1 600 000

x 20%

320 000 B

AUGUST COMPANY Acquisition cost 4 000 000

CA of net assets acquired ( 3 200 000 )

Excess 800 000

Share in net income ( 400 000 )

400 000 D

MIGHTY COMPANY

Acquisition cost 7 000 000

Carrying amount 6 000 000

Excess 1 000 000

Share in NI ( 20% x 1.8M ) 360 000

Amortization of excess cost
( 100 000 )
( 1M/10 )
Investment income 260 000

Original cost 7 000 000

Investment income 260 000

Cash dividend ( 600 000 x
( 120 000 )
20% )
CA of investment in associate 7 140 000 B

FOCUS COMPANY
 Net income 5 000 000

x 6/12 x 30%

750 000 C

SMALL COMPANY
Share in net income ( 1 200
300 000
000 x 25% )
Share in cash dividend ( 480
( 120 000 )
000 x 25% )
Total 180 000

Carrying amount of
1 900 000
investment
Add : Net share in NI and
180 000
cash dividend
2 080 000 C
Claire T. Delvo

Mature Company

Aug-01 Trading securities

Interest income

Aug-31 Trading securities

Interest income

Cost

Accrued interest ( 2M x 12% x 2/12 )

 Cash paid

Nov-01 Cash ( 5M x 12% x 6/12 )

Dec-01 Cash

Sale price ( 5M x 102 )

Add : Accrued interest ( 5M x 12% x 7/12 )

Total cash recieved

 Sale price

Less : Carrying amount of bond sold ( 2/5 x 5.2M )

Gain on sale of TS

Dec-31 Cash ( 2M x 12% x 6/12 )

Accrued interest recievable

Unrealized loss

Market value ( 3M x 98 )
 CA of remaining bonds ( 5200 000 - 2 080 000 )

Unrealized loss

Trading securities - AVCO

Market value ( 2M x 99 )

Carrying amount

Unrealized gain

B ACME bonds

AVCO bonds

Sold

Sold ACME bonds

 Remaining bonds ( ACME-3M, AVCO-2M)

BULLISH COMPANY

Mar-01 Investment in bonds

Apr-01 Investment in bonds

Interest income

Cost ( 4M x 95 )

Add : Accrued interest ( 4M x 12% x 7/12 )

Cash paid
Aug-01 Cash ( 2M x 12% x 6/12 )

Sep-01 Cash ( 4M x 12% x 6/12 )

Oct-01 Cash

Sale price ( 1M x 105 )

Less : Carrying amount of bond sold ( 1/4 x 3 800

000 )

Gain on sale of bonds

Dec-01 Cash

Sale price ( 2M x 100 )

Add : Accrued interest ( 2M x 12% x 8/12 )

Cash recieved

Dec-31 Accrued interest recievable

Unrealized loss
 Market value ( 3M x 90 )

Less : CA of remaining bonds ( 3 800 000 - 950

000 )

Unrealized loss

Bond purchases Long Company

Bond purchases National company

Total

Sales ( National)

Sales ( Long)

Loss ( National)

Total cost of remaining bonds

FLEXIBLE COMPANY

Year Bond outstanding

2017 1 000 000

2018 800 000

2019 600 000

2020 400 000

2021 200 000

3 000 000

2017

Jan-01 Investment in bond

Jun-30 Cash ( 1M x 12% x 6/12 )

Dec-31 Cash

Investment in bonds

Cash
 5 200 000

150 000

Cash 5 350 000

1 960 000

40 000

Cash 2 000 000

1 960 000

40 000
 2 000 000

300 000

Interest income 300 000

5 450 000

Trading securities 2 080 000

Interest income 350 000

Gain on sale of TS 3 020 000

5 100 000

350 000

5 450 000
 5 100 000

( 2 080 000 )

3 020 000

120 000

Interest income 120 000

240 000

Interest income ( 3M x 12% x 8/12 ) 240 000

180 000

Trading securities - ACME 180 000

2 940 000
 ( 3 120 000 )

( 180 000 )

20 000

Unrealized gain 20 000

1 980 000

( 1 960 000 )

20 000

5 000 000

2 000 000

7 000 000

( 2 000 000 )
 5 000 000

1 860 000

Cash ( 2M x 93 ) 1 860 000

3 800 000

280 000

Cash 4 080 000

3 800 000

280 000

4 080 000
 120 000

Interest income 120 000

240 000

Interest income 240 000

1 050 000

Investment in bonds 950 000

Gain on sale of TS 100 000

1 050 000

950 000

100 000
 2 160 000

Investment in bonds 2 000 000

Interest income 160 000

2 000 000

160 000

2 160 000

180 000

Accrued income ( 3M x 12% x 6/12 ) 180 000

150 000

Investment in bonds 150 000

 2 700 000

( 2 850 000 )

150 000

1 860 000

3 800 000

5 660 000

( 950 000 )

( 2 000 000 )

( 150 000 )

2 560 000
 Fraction Premium on amortization

1/3 50 000

4/15 40 000

1/5 30 000

2/15 20 000

1/15 10 000

150 000

1 150 000

Cash 1 150 000

60 000

Interest income 60 000

 60 000

Interest income 60 000

50 000

Interest income 50 000

200 000

Investment in bonds 200 000