A: On January 1st, 2022, Vehicle Inc. bought 5% of the outstanding stock of Bicycle Inc. for $1,000,000. Bicycle Inc. paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use? B: On January 1st, 2022, Vehicle Inc. bought 30% of the outstanding stock of Bicycle Inc. for $6,000,000. Bicycle Inc. also paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use?
A: On January 1st, 2022, Vehicle Inc. bought 5% of the outstanding stock of Bicycle Inc. for $1,000,000. Bicycle Inc. paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use? B: On January 1st, 2022, Vehicle Inc. bought 30% of the outstanding stock of Bicycle Inc. for $6,000,000. Bicycle Inc. also paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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A: On January 1st, 2022, Vehicle Inc. bought 5% of the outstanding stock of Bicycle Inc. for
$1,000,000. Bicycle Inc. paid a dividend of $100,000 to all shareholders on December 31st, 2022.
Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all
journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method
of accounting for equity investments will Vehicle Inc. use?
B: On January 1st, 2022, Vehicle Inc. bought 30% of the outstanding stock of Bicycle Inc. for
$6,000,000. Bicycle Inc. also paid a dividend of $100,000 to all shareholders on December 31st, 2022.
Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all
journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method
of accounting for equity investments will Vehicle Inc. use?
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