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Aug 1, 2023 Dec. 31, 2023 Jan. 10, 2024 FV-NI Investments Cash FV-NI Investments Investment Income or Loss Cash 1250000 17900 12500

Aug 1, 2023 Dec. 31, 2023 Jan. 10, 2024 FV-NI Investments Cash FV-NI Investments Investment Income or Loss Cash 1250000 17900 12500

FINANCIAL ACCOUNTING
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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On August 1, 2023, Wildhorse Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation for $1,250,000. At the time of purchase, WLT's net assets were undervalued by $72,500 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $338,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,374,000. On January 10, 2024, WLT paid a cash dividend. Wildhorse's ownership entitles it to $17,900 of the dividend. Prepare the journal entries on the books of Wildhorse Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Wildhorse elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Aug. 1, 2023 Dec. 31, 2023 Jan. 10, 2024 Account Titles and Explanation FV-NI Investments Cash FV-NI Investments Investment Income or Loss Cash Dividend Revenue Debit 1250000 17900 Credit 12500 175
Transcribed Image Text:On August 1, 2023, Wildhorse Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation for $1,250,000. At the time of purchase, WLT's net assets were undervalued by $72,500 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $338,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,374,000. On January 10, 2024, WLT paid a cash dividend. Wildhorse's ownership entitles it to $17,900 of the dividend. Prepare the journal entries on the books of Wildhorse Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Wildhorse elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Aug. 1, 2023 Dec. 31, 2023 Jan. 10, 2024 Account Titles and Explanation FV-NI Investments Cash FV-NI Investments Investment Income or Loss Cash Dividend Revenue Debit 1250000 17900 Credit 12500 175
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