Pharoah Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,177,500 for 47,100 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $659,000 for 2021. The fair value of Kulikowski’s stock was $28 per share at December 31, 2021. Prepare the journal entries for Pharoah Inc. for 2020 and 2021, assuming that Pharoah cannot exercise significant influence over Kulikowski.
Pharoah Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,177,500 for 47,100 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $659,000 for 2021. The fair value of Kulikowski’s stock was $28 per share at December 31, 2021. Prepare the journal entries for Pharoah Inc. for 2020 and 2021, assuming that Pharoah cannot exercise significant influence over Kulikowski.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 24E
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Pharoah Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,177,500 for 47,100 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $659,000 for 2021. The fair value of Kulikowski’s stock was $28 per share at December 31, 2021.
Prepare the journal entries for Pharoah Inc. for 2020 and 2021, assuming that Pharoah cannot exercise significant influence over Kulikowski.
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