On August 1, 2020, Andrew Inc. acquired 2,500 shares of Carrot Ltd. for $125,000. This investment represents a 15% interest in Carrot Ltd. Andrew Inc. has classified this investment as FVTOCI. On October 31, 2020, Carrot Ltd. paid a $75,000 dividend to its shareholders. At June 30, 2021 Carrot Ltd.'s shares were valued at $35 per share and Carrot Ltd reported a net loss of $25,000 for the year. On September 30, 2021, Andrew Inc. sold the shares for $100,000. Both Andrew Inc. and Carrot Ltd. have June 30, 2021 year-ends. Required: Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
On August 1, 2020, Andrew Inc. acquired 2,500 shares of Carrot Ltd. for $125,000. This investment represents a 15% interest in Carrot Ltd. Andrew Inc. has classified this investment as FVTOCI. On October 31, 2020, Carrot Ltd. paid a $75,000 dividend to its shareholders. At June 30, 2021 Carrot Ltd.'s shares were valued at $35 per share and Carrot Ltd reported a net loss of $25,000 for the year. On September 30, 2021, Andrew Inc. sold the shares for $100,000. Both Andrew Inc. and Carrot Ltd. have June 30, 2021 year-ends. Required: Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On August 1, 2020, Andrew Inc. acquired 2,500 shares of Carrot Ltd. for $125,000. This investment represents a
15% interest in Carrot Ltd. Andrew Inc. has classified this investment as FVTOCI. On October 31, 2020, Carrot Ltd.
paid a $75,000 dividend to its shareholders. At June 30, 2021 Carrot Ltd.'s shares were valued at $35 per share and
Carrot Ltd reported a net loss of $25,000 for the year. On September 30, 2021, Andrew Inc. sold the shares for
$100,000. Both Andrew Inc. and Carrot Ltd. have June 30, 2021 year-ends.
Required:
Prepare dated journal entries for the investment on the acquiring company's books from acquisition
to disposal. Ignore income taxes. Journal entry descriptions are optional.
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