Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $193,000 and appropriately accounted for the investment using the fair-value method ... On January 1, 2018, Milani purchased an additional 30 percent of Seida for $675,000 which resulted in significant influence over Seida. ... On that date, the fair value of Seida’s common stock was $2,010,000 in total. Seida’s January 1, 2018, book value equaled $1,860,000, although land was undervalued by $138,000. Any additional excess fair value over Seida’s book value was attributable to a trademark with an 8-year remaining life. During 2018,Seida reported income of $262,000 and declared and paid dividends of $118,000. Prepare the 2018 journal entries for Milani related to its investments in Seida.   Record acquisition of Seida stock. Record income for the year: 40% of the $262,000 reported income. Record 2018 amortization for trademark excess fair value. Record dividend declaration from Seida.   Record collection of dividend from investee.

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.