Journal entries using the Cost and Equity Method of accounting for the for the following transtation : On 1/2/18 the Xylo Corp. purchased 8000 shares of ABC Co. Common Stock At $20 per share. ABC Co. has 40000 shares of Common Stock outstanding. On 10/31/18 Xylo Corp. received a $1.50 per share dividend from ABC Co. On 12/30/18 ABC Company announced earnings of for the year at $200000. Prepare the calculations and Journal Entries, in good form, if the Investment is classified as Available for sale Part A. The Cost Method. Part B The Equity Method of accounting is applicable.
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for the following transtation :
- On 1/2/18 the Xylo Corp. purchased 8000 shares of ABC Co. Common Stock
At $20 per share. ABC Co. has 40000 shares of Common Stock outstanding.
On 10/31/18 Xylo Corp. received a $1.50 per share dividend from ABC Co.
On 12/30/18 ABC Company announced earnings of for the year at $200000.
Prepare the calculations and Journal Entries, in good form, if the
Investment is classified as Available for sale Part A. The Cost Method.
Part B The Equity Method of accounting is applicable.
When a company purchases less than 50% common shares of other company, such investment is treated as investment in associate company. The holding company is not required to prepare consolidated statements (as the holding is less than 50%), However, it still needs to record them in its book. There are two methods which can be used to record such investment: 1) cost method and 2) equity method.
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