On July 1, 2021, Bird Inc, a private enterprise, acquired 1,250 shares of Duckltd. tot 375, 000. This investment represents a 14% interest in Duck Ltd. and Bird Inc. uses the cost method to record the investment. On October 31, 2021, Duck Ltd. paid a $50,000 dividend to its shareholders. At December 31, 2021, Duck Ltd.'s shares were valued at $40 per share and Duck Ltd. reported a net loss of $50,000 for the year. On March 15, 2021, Bird Inc. sold the shares for $125,000. Both Bird Inc, and Duck Ltd. have December &1, 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 July 1, 2021, Bird Inc, a private enterprise, acquired 1,250 shares of Duckltd. tot 375, 000. This investment represents a 14% interest in Duck Ltd. and Bird Inc. uses the cost method to record the investment. On October 31, 2021, Duck Ltd. paid a $50,000 dividend to its shareholders. At December 31, 2021, Duck Ltd.'s shares were valued at $40 per share and Duck Ltd. reported a net loss of $50,000 for the year. On March 15, 2021, Bird Inc. sold the shares for $125,000. Both Bird Inc, and Duck Ltd. have December &1, 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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Question
On July 1, 2021, Bird Inc, a private enterprise, acquired 1,250 shares of Duckltd. tot 375, 000. This investment
represents a 14% interest in Duck Ltd. and Bird Inc. uses the cost method to record the investment. On October 31,
2021, Duck Ltd. paid a $50,000 dividend to its shareholders. At December 31, 2021, Duck Ltd.'s shares were valued at
$40 per share and Duck Ltd. reported a net loss of $50,000 for the year. On March 15, 2021, Bird Inc. sold the shares
for $125,000. Both Bird Inc, and Duck Ltd. have December &1, 2021 year-ends.
Required:
Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal.
Ignore income taxes.
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