Need help with this accounting questions Parent Corp bought 100% of Sub Co. on January 1, Year 1, for $5,000,000.Annual amortization of $30,000 resulted from this acquisition. Sub Co.reported a net income of $400,000 in Year 1 and paid $150,000 in dividends.What is the Investment in Sub Co. balance on Parent's books as of December31, Year 1, if the equity method has been applied?a. $5,000,000b. $5,220,000c. $5,400,000d. $5,370,000

Step 1: Definition of "Equity Method"The equity method is used to account for investments in…

Answered: Parent Corp bought 100% of Sub Co. on…

Cornerstones of Financial Accounting

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ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

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Problem 11MCQ

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Financial accounting
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On January 2, 20Y7, Mikedes Company acquired 30% of the outstanding stock of Violet Company for $720,000. For the year ended December 31, 20Y7, Violet Company earned income of $190,000 and paid dividends of $40,000. On January 31, 20Y8, Mikedes Company sold all of its investment in Violet Company stock for $770,000. Required: Journalize the entries for Mikedes Company for the purchase of the stock, the share of Violet income, the dividends received from Violet Company, and the sale of the Violet Company stock. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
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