Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 10, Problem 10.4SE
Accounting for equity method
On January 1, 2016, Staub, Inc. decides to invest in 11,700 shares of Horsepasture stock when the stock is selling for $12 per share. On August 1, 2016, Horsepasture paid a $0.30 per share cash dividend to stockholders. On December 31, 2016, Horsepasture reports net income of $60,000 for 2016. Assume Horsepasture has 26,000 shares of voting stock outstanding during 2016.
Requirements
1. Identify what type of investment the Horsepasture stock is for Staub.
2. Journalize the transactions related to Staub's investment in the Horsepasture stock during 2016.
3. In what category and at what value would Staub's report the investment on the December 31, 2016,
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