Turner Company purchased 40% of the outstanding stock of ICA Company for $10,000,000 on January 2, 2018.Turner elects the fair value option to account for the investment. During 2018, ICA earns $750,000 of incomeand on December 30 pays a dividend of $500,000. On December 31, 2018, the fair value of Turner’s investmenthas increased to $11,500,000. What journal entries would Turner make to account for this investment during2018, assuming Turner will account for the investment similar to how it would account for a trading security?
Turner Company purchased 40% of the outstanding stock of ICA Company for $10,000,000 on January 2, 2018.Turner elects the fair value option to account for the investment. During 2018, ICA earns $750,000 of incomeand on December 30 pays a dividend of $500,000. On December 31, 2018, the fair value of Turner’s investmenthas increased to $11,500,000. What journal entries would Turner make to account for this investment during2018, assuming Turner will account for the investment similar to how it would account for a trading security?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Turner Company purchased 40% of the outstanding stock of ICA Company for $10,000,000 on January 2, 2018.
Turner elects the fair value option to account for the investment. During 2018, ICA earns $750,000 of income
and on December 30 pays a dividend of $500,000. On December 31, 2018, the fair value of Turner’s investment
has increased to $11,500,000. What
2018, assuming Turner will account for the investment similar to how it would account for a trading security?
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