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Required: Provide journal entries for Chatim Corporation for all transactions relating to its investment in Topsoil & Landscape Supplies Ltd. for the year 2019 if it accounts for its investment in Topsoil & Landscape Supplies Ltd. using the equity method.

Required: Provide journal entries for Chatim Corporation for all transactions relating to its investment in Topsoil & Landscape Supplies Ltd. for the year 2019 if it accounts for its investment in Topsoil & Landscape Supplies Ltd. using the equity method.

FINANCIAL 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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Please include each step of calculations for my reference. Thanks! 

Chatim Corporation acquired 20,000 of the 100,000 outstanding common shares of Topsoil & Landscape Supplies Ltd. on January 1, 2018, for a cash consideration of $200,000. During 2018, Topsoil & Landscape Supplies Ltd. had a net income of $120,000 and paid dividends of $80,000. At the end of 2018, shares of Topsoil & Landscape Supplies Ltd. were trading for $11 each. During 2019, Topsoil & Landscape Supplies Ltd. had a loss of $60,000 and paid dividends of $40,000. Income for the first half of the year was $80,000 and the loss in the second half of the year was $140,000. The dividends were paid on June 30. On July 2, 2019, Chatim Corporation sold 5,000 shares of Topsoil & Landscape Supplies Ltd. for a consideration of $12 per share. At the end of 2019, the share price of Topsoil & Landscape Supplies Ltd. had fallen to $6 per share. The average of market analysts' forecasts was that the share price could be expected to rise to $8 per share over the next five years. (Assume that the future recoverable value of the shares is assessed to be $8 per share.) Required: Provide journal entries for Chatim Corporation for all transactions relating to its investment in Topsoil & Landscape Supplies Ltd. for the year 2019 if it accounts for its investment in Topsoil & Landscape Supplies Ltd. using the equity method.
Transcribed Image Text:Chatim Corporation acquired 20,000 of the 100,000 outstanding common shares of Topsoil & Landscape Supplies Ltd. on January 1, 2018, for a cash consideration of $200,000. During 2018, Topsoil & Landscape Supplies Ltd. had a net income of $120,000 and paid dividends of $80,000. At the end of 2018, shares of Topsoil & Landscape Supplies Ltd. were trading for $11 each. During 2019, Topsoil & Landscape Supplies Ltd. had a loss of $60,000 and paid dividends of $40,000. Income for the first half of the year was $80,000 and the loss in the second half of the year was $140,000. The dividends were paid on June 30. On July 2, 2019, Chatim Corporation sold 5,000 shares of Topsoil & Landscape Supplies Ltd. for a consideration of $12 per share. At the end of 2019, the share price of Topsoil & Landscape Supplies Ltd. had fallen to $6 per share. The average of market analysts' forecasts was that the share price could be expected to rise to $8 per share over the next five years. (Assume that the future recoverable value of the shares is assessed to be $8 per share.) Required: Provide journal entries for Chatim Corporation for all transactions relating to its investment in Topsoil & Landscape Supplies Ltd. for the year 2019 if it accounts for its investment in Topsoil & Landscape Supplies Ltd. using the equity method.
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