Potsaid Company acquired 30% of the outstanding common stock of Buyuk Inc. on December 31, 2025. The purchase price was $2,400,000 for 100,000 shares. Buyuk declared and paid a $4 per share cash dividend on June 30 and December 31, 2026. Buyuk reported net income of $1,460,000 for 2026. The fair value of Buyuk's stock was $27 per share at December 31, 2026. INSTRUCTIONS a. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid cannot exercise significant influence over Buyuk. b. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid can exercise significant influence over Buyuk.

Potsaid Company acquired 30% of the outstanding common stock of Buyuk Inc. on December 31, 2025. The purchase price was $2,400,000 for 100,000 shares. Buyuk declared and paid a $4 per share cash dividend on June 30 and December 31, 2026. Buyuk reported net income of $1,460,000 for 2026. The fair value of Buyuk's stock was $27 per share at December 31, 2026. INSTRUCTIONS a. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid cannot exercise significant influence over Buyuk. b. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid can exercise significant influence over Buyuk.

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Potsaid Company acquired 30% of the outstanding common stock of Buyuk Inc. on December 31, 2025. The purchase price was $2,400,000 for 100,000 shares. Buyuk declared and paid a $4 per share cash dividend on June 30 and December
31, 2026. Buyuk reported net income of $1,460, 000 for 2026. The fair value of Buyuk's stock was $27 per share at December 31, 2026. INSTRUCTIONS a. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid cannot
exercise significant influence over Buyuk. b. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid can exercise significant influence over Buyuk.

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