Entries for equity investments: 20%-50% ownershipAt a total cost of $2,520,000, Herrera Corporation acquired 144,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 400,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation.a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank.1. Tran Corp. reports net income of $4,540,000 for the current period.2. A cash dividend of $1.70 per common share is paid by Tran Corp. during the current period.b. Why is the equity method appropriate for the Tran Corp. investment?An investment amountover the investee.of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investorexercise significant influence

Journal entries give a complete account of the organization's financial activity, enabling…

At a total cost of $2,520,000, Herrera Corporation acquired 144,000 shares of Tran a. Journalize the entries by Herrera Corporation to record the following information 1. Tran Corp. reports net income of $4,540,000 for the current period. 188 2. A cash dividend of $1.70 per common share is paid by Tran Corp, during the cu during

At a total cost of $2,520,000, Herrera Corporation acquired 144,000 shares of Tran a. Journalize the entries by Herrera Corporation to record the following information 1. Tran Corp. reports net income of $4,540,000 for the current period. 188 2. A cash dividend of $1.70 per common share is paid by Tran Corp, during the cu during

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information Skip to question [The following information applies to the questions displayed below.] As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 530,000 shares for $610,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $380,000 and distributed cash dividends of 30 cents per share. At year-end, the fair value of the shares is $648,000. 2. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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