Assume that Google had the following five transactions involving investments in marketable…
Assume that Google had the following five transactions involving investments in marketable securities accounted for using the equity method. Use this information to answer requirement a below.
1. Purchased 5,000 shares of LookSmart common stock at $10 cash per share; these shares reflect 30% ownership of LookSmart.
2. Received a $2 per share cash dividend on LookSmart common stock.
3. Recorded an accounting adju stment to reflect $100,000 income reported by LookSmart.
4. Year-end market price of LookSmart has increased to $12 per common share.
5. Sold all 5,000 shares of LookSmart common stock for $90,000 cash in the next period.
Yahoo! reports a $2,230 million equity investment in Yahoo! Japan related to its 35% ownership interest, and Yahoo! 's footnotes reveal the following financial information about Yahoo! Japan ($ millions). Use this information to answer requirements . and . below.
a. Use the financial statement effects template to enter the effects (amount and account) for the five Google transactions, above.
b. How much income does Yahoo! report in its 2012 income statement related to this equity investment?
c. Show the computations required to yield the $2,230 million balance in the equity investment account on Yahoo!’s balance sheet.