Download - Advance - Stock Investment Kel II
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Definitions
Stock Investment
Kepemilikan atau pembelian saham-sahamperusahaan oleh suatu perusahaan lain atau
perorangan dengan tujuan untuk memperolehpendapatan tambahan diluar pendapatan dari usaha
pokoknya.
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Level Of Influence
50%
FAIR VALUE
METHODEQUITY METHOD CONSOLIDATION
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Concept Of Cost and EquityMethod
Metode Cost
Investasi dalam
saham biasa dicatat
pada biayanya, dan
dividen dari laba
berikutnyadilaporkan sebagai
pendapatan dividen.
Metode Equity
Investasi dicatat
pada biaya
perolehan dan
disesuaikan dengan
keuntungan dankerugian dan
dividen.
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Fair Value Method
At acquisition: Pilzner buys 2,000 shares of Sud for
100,000.
Pilzner receives 4,000 in dividends from Sud.
Investment in Sud 100,000
Cash 100,000
Cash 4,000
Dividend income 4,000
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Fair Value Method, at Year-end
2-7
Reduce dividend income recognized, if needed
Adjust investment to fair value
Allowance to adjust available-for-
sale securities to fair value
21,000
Other comprehensive income 21,000
If fair value of increases to $120,000 and the Investment inSud account balance is $99,000.
Dividend income 1,000
Investment in Sud 1,000
If Pilzner determines that cumulative dividends exceed itscumulative share of income by $1,000.
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Equity Method
2-8
At acquisition: Pilzner buys 2,000 shares of Sudfor $100,000.
Pilzner receives $4,000 in dividends from Sud.
Investment in Sud 100,000Cash 100,000
Cash 4,000Investment in Sud 4,000
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Equity Method, at Year-end
Pilzner determines that its share of Sud's income is$5,000.
The ending balance in the Investment in Sud is:
$100,000 cost - $4,000 dividends + $5,000 income
= $101,000.
Cash 4,000
Investment in Sud 4,000
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2-10
Acquisition Cost > FV net assetsFV net assets > BV net assets
Payne acquires 30% of Sloan for $5,000. Sloan's identifiable netassets (assets less liabilities) are:
Fair value: A L = $18,800 - $2,800 =$16,000.
Book value: A L = E = $15,000 - $3,000 = $12,000
The $4,000 difference ($16,000 - $12,000) is due to:
$1,000 undervalued inventories sold this year,
$200 overvalued other current assets used this year,
$3,000 undervalued equipment with a life of 20 years, and
$200 overvalued notes payable due in 5 years.
$5,000 > 30%(16,000) > 30%(12,000)
$5,000 > $4,800 > $3,600
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Acquisition of Sloan Stock
At acquisition, Payne pays $2,000 cash and issues commonstock with a fair value of $3,000 and par value of $2,000.Payne also pays $50 to register the securities and $100 inconsulting fees.
Investment in Sloan 5,000
Cash 2,000
Common stock, at par 2,000
Additional paid in capital 1,000Additional paid in capital 50
Investment expense 100
Cash 150
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Cost/Book Value Assignment
Cost of acquisition 5,000
Less 30% book value = 30%(12,000) 3,600Excess of cost over book value 1,400
Assigned to: Amount Amortization
Inventories 30%(+1,000) 300 1st yearOther curr. assets 30%(-200) (60) 1st yearEquipment 30%(+3,000) 900 20 years
Note payable 30%(+200) 60 5 yearsGoodwill (to balance) 200 NoneTotal 1,400
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Dividends and Income
Payne receives $300 dividends from Sloan.
Sloan reports net income of $900.
Payne will recognize its share (30%) of Sloan'sincome, but will adjust it for amortization of thedifferences between book and fair values.
Cash 300
Investment in Sloan 300
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Amortization and Investment Income
Cost/book value
differences:Initial
amoun
t
1
st
year
amort.Unamortized
excess at year-end
Inventories 300 ( 300) 0
Other curr. Assets (60) 60 0
Equipment 900 (45) 855
Note payable 60 (12) 48
Goodwill 200 0 200
Total 1,400 ( 297) 1,103
Investment income is 30% of Sloan's net income amortization30%( 3,000) 297 = 603.
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Year-end Entry & Balance
Record the investment income
The ending balance in the investment account is:
5,000300 + 603
= 5,303.
Costdividends + investment income
Investment in Sloan 603
Income from Sloan 603