On January 6, Year 1, Bulldog Co. purchased 29% of the outstanding stock of Gator Co. for $179,000. Gator Co. paid total dividends of $19,700 to all shareholders on June 30. Gator Co. had a net loss of $35,800 Year 1. a.  Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Jan. 6 - Purchase   fill in the blank f12e39ffe00ff83_2         fill in the blank f12e39ffe00ff83_4 June 30 - Dividend   fill in the blank f12e39ffe00ff83_6         fill in the blank f12e39ffe00ff83_8 Dec. 31 - Equity Loss   fill in the blank f12e39ffe00ff83_10         fill in the blank f12e39ffe00ff83_12 b.  Compute the balance of Investment in Gator Co. Stock on December 31, Year 1. $fill in the blank ead8c9031057025_1 c.  How does valuing an investment under the equity method differ from valuing an investment at fair value? Under the   method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The   method uses market price information to value the investment in the investee.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 6, Year 1, Bulldog Co. purchased 29% of the outstanding stock of Gator Co. for $179,000. Gator Co. paid total dividends of $19,700 to all shareholders on June 30. Gator Co. had a net loss of $35,800 Year 1.

a.  Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock.

Jan. 6 - Purchase   fill in the blank f12e39ffe00ff83_2  
      fill in the blank f12e39ffe00ff83_4
June 30 - Dividend   fill in the blank f12e39ffe00ff83_6  
      fill in the blank f12e39ffe00ff83_8
Dec. 31 - Equity Loss   fill in the blank f12e39ffe00ff83_10  
      fill in the blank f12e39ffe00ff83_12

b.  Compute the balance of Investment in Gator Co. Stock on December 31, Year 1.
$fill in the blank ead8c9031057025_1

c.  How does valuing an investment under the equity method differ from valuing an investment at fair value?

Under the   method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The   method uses market price information to value the investment in the investee.

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