Show me how to post my homework

Just do my homework!

  • HTML tags will be transformed to conform to HTML standards.
  • Add rel="nofollow" to external links
Tutorial
Submitted by KnowledgeCats on Mon, 2013-10-28 06:47
due date not specified
answered 1 time(s)
KnowledgeCats is willing to pay $6.99
KnowledgeCats bought 1257 out of 6462 answered question(s)

Brooks Corp. is a medium-sized corporation specializing

Brooks Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company’s profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Brooks has had a policy of investing idle cash in equity securities. In particular, Brooks has made periodic investments in the company’s principal supplier, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Brooks does not have significant influence over the operations of Norton Industries.



Cheryl Thomas has recently joined Brooks as assistant controller, and her first assignment is to prepare the 2012 year-end adjusting entries for the accounts that are valued by the “fair value” rule for financial reporting purposes. Thomas has gathered the following information about Brooks’s pertinent accounts.

1.

 

Brooks has trading securities related to Delaney Motors and Patrick Electric. During this fiscal year, Brooks purchased 100,000 shares of Delaney Motors for $1,400,000; these shares currently have a market value of $1,600,000. Brooks’ investment in Patrick Electric has not been profitable; the company acquired 50,000 shares of Patrick in April 2012 at $20 per share, a purchase that currently has a value of $720,000.

2.

 

Prior to 2012, Brooks invested $22,500,000 in Norton Industries and has not changed its holdings this year. This investment in Norton Industries was valued at $21,500,000 on December 31, 2011. Brooks’ 12% ownership of Norton Industries has a current market value of $22,225,000.



For both classes of securities presented above, describe how the results of the valuation adjustments made to reflect the application of the “fair value” rule would be reflected in the body of and notes to Brooks’ 2012 financial statements. (Refer to Problem 17-8.)

Answer
Submitted by KnowledgeCats on Mon, 2013-10-28 06:47
teacher rated 96 times
2.916665
price: $6.99

Brooks Corp. is a medium-sized corporation specializing

body preview (67 words)

xx

xxxxxxxxx

 

 

 

 

 xxxxxxxxx Entries

  
xx

 xxxxxx xx Delaney xxxxx

 x     1,400,000.00

 
 

    xxxx

 

xxx     xxxxxxxxxxxx

  xx 
 

 xxxxxxxxxx Fair value adjustment

xx$xxxxxxxxxxxxxxxx 200,000.00

 
xx

xxxxxx Unrealized holding gains

 

 xxxxxxxxxxxxxxxxx xxxxxxxxxx

   xx
 

 Shares in xxxxxxx

xx$         100,000.00

xx
 

xxxxxx xxxx

 

 $         100,000.00

xx  xx
xx

 Unrealized marke value xxxx

 $         280,000.00

 
 

xxxxxx Securities xxxx value adjustment

 

xx$xxxxxxxxxxxxxxxx xxxxxxxxxx

xxxxxxxx
 

xxShares in xxxxxx industries

xx$   xxxxxxxxxxxxx

xx
xx

    xxxx

 

xx$xxxx xxxxxxxxxxxxx

xxxx  
xx

 xxxxxxxxxx xxxxxx xxxxx xxxx

xxxxxxxxxxxxxxxxxxx 275,000.00

 
xx

xxxxxx Securities xxxx value xxxxxxxxxx

xx

xxxxxxxxxxxxxxxxxxx xxxxxxxxxx

xx xxxx

 x

xxSecurities in Delaney Motors

xxx     1,600,000.00

 
 

 xxxxxxxxxx in xxxxxxx

xxxxxxxxxxxxxxxxxxx xxxxxxxxxx

 
 

xxxxxxxxxxxx xx Norton xxxxxxxxxx

 $   22,225,000.00

 
xx

 Total Investment

 

xx$xxxx 24,545,000.00

xxxx xx

 c

 xxxxxxxxx xxxxxxxxxxx

xx 
 xx xx
xx

xxxxxxx Dividends

xxx         xxxxxxxxxx

xx
 

 Brooks share

 $xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 0.25

xx
xx

xxDividends of xxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxx 25,000.00

 
  xx 
xx

xxCash

xxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxx

xx
 

xxxxxx Dividends reciept

 

 x            25,000.00

xx

 

xx


Buy this answer