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On January 6, 2018, Bulldog Co. purchased 25% of the outstanding common stock of $162,000. Gator Co. paid total divi 2018. Gator had a net loss of $32,400 for 2018. < a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gato Jan. 6-Purchase Investment in Gator Co. Stock ✓ 88 88 June 30-Dividend Cash Investment in Gator Co. Stock Dec. 31-Equity Loss Loss of Gator Co Investment in Gator Co. Stock

On January 6, 2018, Bulldog Co. purchased 25% of the outstanding common stock of $162,000. Gator Co. paid total divi 2018. Gator had a net loss of $32,400 for 2018. < a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gato Jan. 6-Purchase Investment in Gator Co. Stock ✓ 88 88 June 30-Dividend Cash Investment in Gator Co. Stock Dec. 31-Equity Loss Loss of Gator Co Investment in Gator Co. Stock

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Entries for equity investments: 20%-50% ownership On January 6, 2018, Bulldog Co. purchased 25% of the outstanding common stock of $162,000. Gator Co. paid total dividends of $19,400 to all shareholders on June 30, 2018. Gator had a net loss of $32,400 for 2018. a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Jan. 6-Purchase Investment in Gator Co. Stock G✓ June 30- Dividend Cash Cash Investment in Gator Co. Stock Dec. 31-Equity Loss Loss of Gator Co. Investment in Gator Co. Stock 88
Transcribed Image Text:Entries for equity investments: 20%-50% ownership On January 6, 2018, Bulldog Co. purchased 25% of the outstanding common stock of $162,000. Gator Co. paid total dividends of $19,400 to all shareholders on June 30, 2018. Gator had a net loss of $32,400 for 2018. a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Jan. 6-Purchase Investment in Gator Co. Stock G✓ June 30- Dividend Cash Cash Investment in Gator Co. Stock Dec. 31-Equity Loss Loss of Gator Co. Investment in Gator Co. Stock 88
b. Compute the balance of Investment in Gator Co. Stock on December 31, 2018. c. How does valuing an investment under the equity method differ from valuing an investment at fair value? Under the equity method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The fair value ✔method uses market price information to value the investment in the investee.
Transcribed Image Text:b. Compute the balance of Investment in Gator Co. Stock on December 31, 2018. c. How does valuing an investment under the equity method differ from valuing an investment at fair value? Under the equity method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The fair value ✔method uses market price information to value the investment in the investee.
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