On January 1, 2021, Mojito Corporation purchased 25% (20,000 shares) of the outstanding stock of Dulcinea Corporation for $145,000. During 2021, Dulcinea Corporation paid total dividends of $55,000 and earned $85,000 in net income. At the end of 2021, Dulcinea Corporation's stock had a fair market value of $160,000. Required: a. Prepare the journal entries that Mojito would make during 2021 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (Le fair value method). b. Prepare the journal entries that Mojito would make during 2021 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method).
On January 1, 2021, Mojito Corporation purchased 25% (20,000 shares) of the outstanding stock of Dulcinea Corporation for $145,000. During 2021, Dulcinea Corporation paid total dividends of $55,000 and earned $85,000 in net income. At the end of 2021, Dulcinea Corporation's stock had a fair market value of $160,000. Required: a. Prepare the journal entries that Mojito would make during 2021 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (Le fair value method). b. Prepare the journal entries that Mojito would make during 2021 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
please help me
Transcribed Image Text:On January 1, 2021, Mojito Corporation purchased 25% (20,000 shares) of the
outstanding stock of Dulcinea Corporation for $145,000. During 2021, Dulcinea
Corporation paid total dividends of $55,000 and earned $85,000 in net income. At the
end of 2021, Dulcinea Corporation's stock had a fair market value of $160,000.
4.
Required:
a. Prepare the journal entries that Mojito would make during 2021 assuming that they
do NOT have significant influence over Dulcinea as a result of their stock ownership
(ie fair value method).
b. Prepare the journal entries that Mojito would make during 2021 assuming that they
do have significant influence over Dulcinea as a result of their stock ownership (i.e.
equity method).
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education