X purchased 40% of Y on January 1,2019 for $400,000. Y paid dividends of $50,000 in each year. Y's income statements for 2019 and 2020 showed the following: 2019 2020 Income (loss) before income taxes $100,000 (60,000) Income tax expense (recovery) 40,000 (15,000) Net income (loss) $60,000 ($45,000) Other comprehensive income (net of tax) 20,000 25,000 Comprehensive income (loss) $80,000 ($20,000) At December 31, 2019, the fair value of the investment was $440,000 and at December 31, 2020, the fair value of the investment was $420,000. Required: Prepare X's journal entries for 2019 and 2020, assuming that is a significant influence investment.
X purchased 40% of Y on January 1,2019 for $400,000. Y paid dividends of $50,000 in each year. Y's income statements for 2019 and 2020 showed the following: 2019 2020 Income (loss) before income taxes $100,000 (60,000) Income tax expense (recovery) 40,000 (15,000) Net income (loss) $60,000 ($45,000) Other comprehensive income (net of tax) 20,000 25,000 Comprehensive income (loss) $80,000 ($20,000) At December 31, 2019, the fair value of the investment was $440,000 and at December 31, 2020, the fair value of the investment was $420,000. Required: Prepare X's journal entries for 2019 and 2020, assuming that is a significant influence investment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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X purchased 40% of Y on January 1,2019 for $400,000. Y paid dividends of $50,000 in
each year. Y's income statements for 2019 and 2020 showed the following: 2019 2020 Income (loss) before income taxes $100,000 (60,000) Income tax expense (recovery) 40,000 (15,000) Net income (loss) $60,000 ($45,000) Other comprehensive income (net of tax) 20,000 25,000 Comprehensive income (loss) $80,000 ($20,000) At December 31, 2019, the fair value of the investment was $440,000 and at December 31, 2020, the fair value of the investment was $420,000. Required: Prepare X's
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