Question.2993 - Instructions Company owner Andrew Terrance has reviewed the 2012 financial statements you prepared for Hill Company as the accountant, and questions the $6,000 loss reported on the sale of its investment in Baumer Co. common stock. Hill acquired 50,000 shares of Baumer's common stock on December 31, 2010, at a cost of $500,000. This stock purchase represented a 40% interest in Blackhawk. The 2011 income statement reported that earnings from all investments were $126,000. On January 3, 2012, Hill Company sold the Baumer stock for $575,000. Baumer did not pay any dividends during 2011 but reported a net income of $202,500 for that year. Andrew believes that because the Baumer stock purchase price was $500,000 and was sold for $575,000, the 2012 income statement should report a $75,000 gain on the sale. Required: Draft a one-half page memorandum (at least 2 paragraphs) to Terrio explaining why the $6,000 loss on sale of Blackhawk stock is correctly reported. You will be graded on how well you address the questions. Addressing the questions involves identifying relevant facts, applying the chapter concepts,, and answering each question completely. Proper APA formatting is expected and required (cited sources, reference page, etc.). Supplement and synthesize your analysis with outsides scholarly sources. For assistance with APA citations, please visit the following links: The American Psychological Association Website: http://www.apastyle.org/ The APA site has numerous links (see “most popular”), but you may want to view the tutorial if you are completely new to APA: http://www.apastyle.org/learn/tutorials/basics-tutorial.aspx Note: This assignment will be submitted for plagiarism detection. You may not copy and paste any part of your submission, (not even from the text book) unless it is quoted and cited. Your submission must return less than 20% similarity index in order to be graded.
Answer Below:
To xxxxxx From xxx Accounts xxxxxxxxxx Date xxxx RE xxxx on xxxx of xxxxxxxxxxxx would xxxx to xxxxxx you xxxx the xxxx on xxxxx of xxxxxxxxx Stock xxx been xxxxxxxx correctly xxxxx is xx error xx the xxxxxx of xxxx booked x e xxx reason xxxxx that xx had xxxxxxxx a xxxxx in xxxxxxxxx for xxx the xxxxxx reported xx the xxxxxxxxx is xx no xxxxxxxxx were xxxx the xxxxxx earning xxxx held xx retained xxxxxxxx Thus xxx stake xx Hill xxxxxxx in xxx profit xxxxx be xx Thus xxx value xx equity xx the xxxxx of xxxx Company xxxxx be xx whereas xxx investment xxx sold xxx Thus xxx loss xx has xxxx reported xxxxxxxxxMore Articles From Accounting
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