Turner Company purchased 30% of the outstanding stock of ICA Company for $10,300,000 on January 2, 2024. Turner elects the fair value option to account for the investment. During 2024, ICA reports $780,000 of net income, and on December 30 pays a dividend of $540,000. On December 31, 2024, the fair value of Turner's investment has increased to $12,100,000. Prepare the journal entries in the books of Turner to account for this investment during 2024. Assume that Turner will account for the investment using the fair value through net income approach. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Answer is complete but not entirely correct.
Turner Company purchased 30% of the outstanding stock of ICA Company for $10,300,000 on January 2, 2024. Turner elects the fair value option to account for the investment. During 2024, ICA reports $780,000 of net income, and on December 30 pays a dividend of $540,000. On December 31, 2024, the fair value of Turner's investment has increased to $12,100,000. Prepare the journal entries in the books of Turner to account for this investment during 2024. Assume that Turner will account for the investment using the fair value through net income approach. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Answer is complete but not entirely correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Turner Company purchased 30% of the outstanding stock of ICA Company for $10,300,000 on January 2, 2024. Turner
elects the fair value option to account for the investment. During 2024, ICA reports $780,000 of net income, and on
December 30 pays a dividend of $540,000. On December 31, 2024, the fair value of Turner's investment has increased to
$12,100,000.
Prepare the journal entries in the books of Turner to account for this investment during 2024. Assume that Turner will
account for the investment using the fair value through net income approach.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No
1
2
3
Answer is complete but not entirely correct.
General Journal
Date
January 02, 2024 Investment in equity affiliate
Cash
December 30, 202 Cash
Investment in equity affiliate
December 31, 202 Fair value adjustment
Gain on investment (unrealized, OCI)
Debit
10,300,000
162,000
1,962,000 X
Credit
10,300,000
162,000
1,962,000 X
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