Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method. a. An investor purchases 14,400 common shares of an investee at $16 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the investee. b. The investee reports net income of $172,800. c. The investor receives a cash dividend of $1.50 per common share from the investee. d. The investor sells all 14,400 common shares of the investee for $260,280. General Journal Ref. Description Debit Credit a. b. C. d. Equity investment
Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method. a. An investor purchases 14,400 common shares of an investee at $16 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the investee. b. The investee reports net income of $172,800. c. The investor receives a cash dividend of $1.50 per common share from the investee. d. The investor sells all 14,400 common shares of the investee for $260,280. General Journal Ref. Description Debit Credit a. b. C. d. Equity investment
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter2: Asset And Liability Valuation And Income Recognition
Section: Chapter Questions
Problem 21PC
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Transcribed Image Text:Equity method journal entries (price equals book value)
Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method.
a. An investor purchases 14,400 common shares of an investee at $16 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the
investee.
b. The investee reports net income of $172,800.
c. The investor receives a cash dividend of $1.50 per common share from the investee.
d. The investor sells all 14,400 common shares of the investee for $260,280.
General Journal
Ref.
Description
Debit
Credit
a.
b.
C.
d.
Equity investment
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