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Instructions For Q2 Q3 On January 1 2019 John Paul Jones Corp Purchased 30 Of S

(instructions for Q2 & Q3)

On January 1, 2019, John Paul Jones Corp. purchased 30% of Sky Tech Inc. for $45 million. This acquisition gave John Paul Jones significant influence over Sky Tech. At the date of acquisition, the book value of Sky Tech’s net assets was $75 million and their fair value was $90 million. The difference was attributed to the fair value of equipment exceeding book value, and the remaining useful life of this equipment was 5 years. For 2019, Sky Tech reported a net income of $75 million and declared and paid $20 million in dividends. 

Q2)The total amount that John Paul Jones Corp. would report for its investment in Sky Tech Inc. on its December 31, 2019 balance sheet is:

A) $67.5 million.

B) $61.5 million.

C) $60.6 million.

D) $66.6 million.

Q3) Assuming John Paul cannot exercise significant influence over Sky Tech and classifies this investment as fair value through net income, total investment income reported by John Paul Jones Corp. on its year end December 31, 2019 income statement is:

A) $6 million.

B) $21.6 million.

C) $22.5 million.

D) $5.1 million.

Q4) Bon Jovi Inc. purchased ABC Company bonds and LMN Company common stock during 2018, its first year of operations. Bon Jovi still owns the securities at the end of 2019. The following information pertains to these securities. The ABC Company bonds are classified as securities available for sale. The following pertains to these bonds: amortized cost is $360,000 at the end of 2018 and $367,500 at the end of 2019; and the fair value of these bonds are $375,000 at the end of 2018 and $400,000 at the end of 2019. The LMN Company common stock is classified as fair value through net income. The following pertains to this investment: the common stock cost $140,000; and the fair value is $130,500 at the end of 2018 and $150,400 at the end of 2019. At what amount would Bon Jovi report accumulated other comprehensive income in the shareholders’ equity section of its year end 2019 balance sheet?

A) zero.

B) positive $32,500.

C) positive $40,000.

D) positive $42,900. 

Q12)

In 2019, Jimmy Page Company discovered a building addition completed in January 2017, at a cost of $360,000 was charged to building maintenance expense in error. The cost should have been charged to the building asset account. The company uses straight line depreciation; the estimated life of the building addition when it was completed in 2017 was 25 years, the estimated residual value of the building addition was $100,000, and the company records a full year depreciation on all assets place in service during the year. Fixing this error in 2019 would have the following impact on Page’s accounting records:

  1. A) increase the book value of the equipment by $239,200.
  2. B) increase the book value of the equipment by $360,000.
  3. C) decrease retained earnings by $360,000.
  4. D) increase retained earnings by $339,200.

Personally I had I was confused in solving this but I had these answers and wanted to double check with someone that understands it better. I wanted to know if i did the right steps.

Q2) b- 61.5 million Q3) c-22.5 million Q4) B-pos 32500 Q12) D increase by 339200

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