Roland Company purchased 16,000 outstanding shares of Downes Company by exchanging its 18,000 shares at $45 fair value ($1 par value). Generally, companies prefer investment in companies by issuing stock as it keeps the cash intact and company’s liquidity remains same. To record: Investment in Downes Company

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Chapter 2, Problem 2.2.1P

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Introduction: Roland Company purchased 16,000 outstanding shares of Downes Company by exchanging its 18,000 shares at $45 fair value ($1 par value). Generally, companies prefer investment in companies by issuing stock as it keeps the cash intact and company’s liquidity remains same.

To record: Investment in Downes Company

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