On January 1 2013, Ahmed Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a longer-term investment. The purchase price of OMR 4,850,000 was paid in cash. Additional data on Singer Company for the four years following the purchase are 2013 2014 2015 2016 Net Income (loss) 1,800,000 700,000 (320,000) (260,000) Cash dividends paid, 12/30 500,000 500,000 500,000 500,000 Required: Prepare journal entries under each of the following methods to record the purchase and all investment-related subsequent events on the books of Ahmed Company for the four years. Ahmed uses the cost method to account for its investment in Singer. Ahmed uses the partial equity method to account for its investment Singer.
On January 1 2013, Ahmed Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a longer-term investment. The purchase price of OMR 4,850,000 was paid in cash. Additional data on Singer Company for the four years following the purchase are 2013 2014 2015 2016 Net Income (loss) 1,800,000 700,000 (320,000) (260,000) Cash dividends paid, 12/30 500,000 500,000 500,000 500,000 Required: Prepare journal entries under each of the following methods to record the purchase and all investment-related subsequent events on the books of Ahmed Company for the four years. Ahmed uses the cost method to account for its investment in Singer. Ahmed uses the partial equity method to account for its investment Singer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- On January 1 2013, Ahmed Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a longer-term investment. The purchase price of OMR 4,850,000 was paid in cash.
Additional data on Singer Company for the four years following the purchase are
|
|
2013 |
2014 |
2015 |
2016 |
|
Net Income (loss) |
1,800,000 |
700,000 |
(320,000) |
(260,000) |
|
Cash dividends paid, 12/30 |
500,000 |
500,000 |
500,000 |
500,000 |
Required: Prepare
- Ahmed uses the cost method to account for its investment in Singer.
- Ahmed uses the partial equity method to account for its investment Singer.
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