a. What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment either by carrying the investment at fair value, or by using the equity method? b-1. Give all appropriate journal entries for 20X8 that Ravine would make if it carries the investment at fair value. b-2. Give all appropriate journal entries for 20X8 that Ravine would make if it uses the equity method.
Ravine Corporation purchased 40 percent ownership of Valley Industries for $124,400 on January 1, 20X6, when Valley had capital stock of $256,000 and
Required:
a. What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment either by carrying the investment at fair value, or by using the equity method?
b-1. Give all appropriate
b-2. Give all appropriate journal entries for 20X8 that Ravine would make if it uses the equity method.
Required A
net income
year | fair value | equity method |
2016 | ||
2017 | ||
2018 | ||
2019 |
required b
Record the dividend received from Valley Industries under the fair value method.
Record the unrealized gain from Valley Industries under the fair value method.
required b2
Record the dividend received from Valley Industries under the equity method.
![Ravine Corporation purchased 40 percent ownership of Valley Industries for $124,400 on January 1, 20X6, when Valley had capital
stock of $256,000 and retained earnings of $55,000. During the period of January 1, 20X6, through December 31, 20X9, the market
value of Ravine's investment in Valley's stock increased by $11,000 each year. The following data were reported by the companies for
the years 20X6 through 20X9:
Dividends Declared
Operating Income,
Ravine Corporation
$148, 000
Net Income,
Valley Industries
$31, 000
Ravine
Valley
$21, 000
Year
20X6
$ 81, 000
20X7
81, 000
223, 000
168, 000
51, 000
10, 000
41, 000
81, 000
101, 000
111, 00Θ
41, 000
40, 000
21,000
20Χ8
20X9
Required:
a. What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate
investment either by carrying the investment at fair value, or by using the equity method?
b-1. Give all appropriate journal entries for 20X8 that Ravine would make if it carries the investment at fair value.
b-2. Give all appropriate journal entries for 20X8 that Ravine would make if it uses the equity method.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F77e2e77d-de72-4492-a937-a252742b84ab%2F3c3a437b-a61b-440e-b9bd-13e8bdef42ca%2F7i3z21b_processed.png&w=3840&q=75)
![Required A
Required B1
Required B2
What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the
intercorporate investment either by carrying the investment at fair value, or by using the equity method?
Net Income
Year
Fair Value
Equity Method
20X6
20X7
20X8
20X9
< Required A
Required B1
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F77e2e77d-de72-4492-a937-a252742b84ab%2F3c3a437b-a61b-440e-b9bd-13e8bdef42ca%2Figttc8l_processed.png&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 5 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)