1 answer

E 9 90% 3:38 pm Q2. a) Microsoft owns equity-method investments in several companies. Suppose Microsoft...

Question:

e 9 90% 3:38 pm Q2. a) Microsoft owns equity-method investments in several companies. Suppose Microsoft paid $1,000,000 to ac

e 9 90% 3:38 pm Q2. a) Microsoft owns equity-method investments in several companies. Suppose Microsoft paid $1,000,000 to acquire a 25% investment in Sun - Software Company. Sun Software reported net income of $640,000 for the first year and declared and paid cash dividends of $420,000. 1) Record the following in Microsoft's journal: (a) Purchase of the investment, (b) Microsoft's proportion of Sun Software's net income (c) Receipt of the cash dividends. # What is the ending balance in Microsoft's investment account? YORKVILLE WWW.YORVILLE b) You are required to identify whether the following bonds will be issued at face value, a premium, or a discount: The market interest rate is 9% Moonlight Inc. issues bonds with a stated rate of 8.5% ii. Skyrocket Corporation issued 7.5% bonds when the market rate was 7.5%. IlI. XSpace Corporation issued 8% bonds when the market interest rate was 6.75% iv. TV Company issued bands that pay cash interest at the stated interest rate of 7%. At the date of issuance, the market interest rate was 8.25% L + 7

Answers

Q 210) 16 Recording Journal Entry in Microsoft doumal (a) Purchase of the investment Event Credit General Journal Debit în veEnding balance in Miemsoft investment alcun) (4 1055000 * Working note Equity method of investment : in The method applied inSince, Mauret interest rate is g./. and stated rate is 8.51. since, Mayleet in teuest rate and bend Coupoun rate both are 2.0

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