Q 10 –Daoud Concrete acquired 25% of the outstanding common stock of Qadir, Inc. on January 1, 2021, by paying $1,350,000 for 50,000 shares. Qadir declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2021. Qadir reported net income of $600,000 for the year. At December 31, 2021, the market price of Qadir's common stock was $30 per share. Instructions (a). Prepare the journal entries for Daoud's Concrete for 2021 assuming Daoud's cannot exercise significant influence over Qadir. (Use the cost method and assume Qadir common stock should be classified as available-for-sale.) (b). Prepare the journal entries for Daoud's Concrete for 2021, assuming Daoud's can exercise significant influence over Qadir. (Use the equity method.) (c). In tabular form, indicate the investment and income account balances at December 31, 2021, under each method of accounting.

Q 10 –Daoud Concrete acquired 25% of the outstanding common stock of Qadir, Inc. on January 1, 2021, by paying $1,350,000 for 50,000 shares. Qadir declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2021. Qadir reported net income of $600,000 for the year. At December 31, 2021, the market price of Qadir's common stock was $30 per share. Instructions (a). Prepare the journal entries for Daoud's Concrete for 2021 assuming Daoud's cannot exercise significant influence over Qadir. (Use the cost method and assume Qadir common stock should be classified as available-for-sale.) (b). Prepare the journal entries for Daoud's Concrete for 2021, assuming Daoud's can exercise significant influence over Qadir. (Use the equity method.) (c). In tabular form, indicate the investment and income account balances at December 31, 2021, under each method of accounting.

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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