105 orleans corporation purchased 1 000 000 shares of creole corporation 39 s common 4314041

105.Orleans Corporation purchased 1,000,000 shares of Creole Corporation's common stock, which constitutes 10% of Creole's voting stock on June 30, 2016 for $42 per share. Orleans' intent is to keep these shares beyond the current year. On December 20, 2016, Creole paid a $4,000,000 cash dividend. On December 31, 2016, Creole's stock was trading at $45 per share and their reported 2016 net income was $52 million.

Required:

A. Record the transaction to record the acquisition of Creole Corporation on June 30, 2016.
B. Record the transaction for the dividend received by Orleans on December 20, 2016.
C. Record any year-end entries needed by Orleans Corporation.  
 

106.Describe the difference in the calculation of the realized gain or loss on the sale of an investment when the trading security classification is used relative to use of the available-for-sale classification.  
 

107.On December 31, 2016, Jean World Corporation recorded the following journal entry relating to its investment in 9,000 shares of common stock of Soda Corporation.

12/31/2016:Long-term investment in common stock54,000

        Equity in affiliate earnings 54,000

At the end of 2016, Soda Corporation reported net income of $120,000.
Earlier in the year, Soda declared and paid dividends of $18,000.

Required:

A. What method is being used to account for this investment?
B. What is the total number of shares outstanding of Soda's common stock?  
 

108.As a long-term investment, Martha Company purchased 5,000 of the 12,500 outstanding voting shares of Stewart Corporation at $20 per share on January 1, 2016. At the end of 2016, Stewart reported net income of $100,000 and declared and paid dividends of $10,000. The market price of the Stewart stock at the end of 2016 was $23 per share.

Required:

Calculate the net balance in Martha's investment account at the end of 2016.  
 

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