1.Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. (Cost Method) 2.Assume significant influence was acquired. Re-enact the appropriate journal entries from the purchase through the end of the year to report the investment balance in the consolidated financial statements of Painters’ Equipment Company. (Equity Method)
As a long-term investment, Painters’ Equipment Company purchased 20% of AMC Supplies Ltd’s 400,000 shares for OMR480,000 at the beginning of the financial year of both companies. On the purchase date, the fair value and the book value of AMC’s net assets were equal. During the year, AMC earned net income of OMR250,000 and distributed cash dividends of OMR0.250 per share. At year-end, the fair value of the shares is OMR505,000.
Required:
1.Assume no significant influence was acquired. Prepare the appropriate
2.Assume significant influence was acquired. Re-enact the appropriate journal entries from the purchase through the end of the year to report the investment balance in the consolidated financial statements of Painters’ Equipment Company. (Equity Method)
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