ACCY 3102–Spring’16

ACCY 3102–Spring’16

Assignment #2

Due Thursday, February 18th (on Blackboard)

Late or e-mailed assignments will not be graded

 

 

 

Problem #1  Yahoo (YHOO)

Obtain Yahoo’s 2014 Annual Report online.  Review the financial statements and the notes to the financial statements.

 

1. List the types of investments held by Yahoo (Trading securities, available-for-sale, equity-method investees, subsidiaries).

 

Equity securities

2. Assume Yahoo has only one investee in which it holds 45% ownership. Based on the basic financial statements, how much was the investee’s net income (loss) for 2014?

 

3. Assume Yahoo has a 25% owned investee and it intends to hold the investment indefinitely. Also assume that the investee paid Yahoo $8M in dividends and Yahoo recorded the following journal entry:

 

Cash                $8M
Dividend Income          $8M

 

What would be the effect on the following items on Yahoo’s financials (overstated, understated, or no effect):

Circle one:

 

1. a) Cash                            OS       US       NE
2. b) Net Income                  OS       US       NE
3. c) Total Assets                 OS       US       NE
4. d) Contributed Capital      OS       US       NE

 

 

1. What is the total fair value of Yahoo’s available-for-sale securities at year-end 2014?

 

1. Prepare the journal entry to record Yahoo’s share of earnings for fiscal year 2015 of its investees over which it has significant influence.

 

1. Assume Yahoo has one subsidiary that is 70% owned. How much is the total stockholders’ equity of Yahoo’s subsidiary at year-end 2014?

 

1. Yahoo has several available-for-sale securities, one category being ‘corporate equity securities’.  Prepare the journal entry to record the change in fair value of Yahoo’s corporate equity securities from fiscal year 2013 to 2014.

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