values of Tun ' s FIFO inventory and land exceeded their carrying amounts . How do these excesses of fair values over carrying amounts affect Park ' s reported equity in Tun ' s 2004 earnings ?
Question 17
On July 1 , 2005 , Pell Co . purchased Green Corp . ten-year , 8 % bonds with a face amount of $ 500,000 for $ 420,000 . The bonds mature on June 30 , 2013 and pay interest semi-annually on June 30 and December 31 . Pell has the intent and ability to hold the bonds until maturity . Using the interest method , Pell recorded bond discount amortization of $ 1,800 for the six months ended December 31 , 2005 . For this held-to-maturity investment , Pell should report 2005 revenue of
Question 18
Jersey , Inc . is a retailer of home appliances and offers a service contract on each appliance sold . Jersey sells appliances on installment contracts , but all service contracts must be paid in full at the time of sale . Collections received for service contracts should be recorded as an increase in a
Question 19
On January 1 , 2005 , Mega Corp . acquired 10 % of the outstanding voting stock of Penny , Inc . On January 2 , 2006 , Mega gained the ability to exercise significant influence over financial and operating control of Penny by acquiring an additional 20 % of Penny ' s outstanding stock . The two purchases were made at prices proportionate to the value assigned to Penny ' s net assets , which equaled their carrying amounts . For the years ended December 31 , 2005 and 2006 , Penny reported the following : In 2006 , what amounts should Mega report as current year investment income and as an adjustment , before income taxes , to 2005 investment income ?