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Recording Entries for Equity Investment: FV-NI and Equity Method On January 1, Allen Corporation purchased 30% of the 30,000 outstanding common shares f Towne Corporation at $17 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $24,000 and declared and paid dividends of $8,000. As of December 31, common shares of Towne Corporation were trading at $20 per share. Journal Entries with Significant influence Journal Entries without Significant Influence Financial Statement Presentation c. indicate the amount of income that would be reported on the income statement and the investment balance on the year-end balance sheet under requirement (a) and requirement (b). Investment Net Balance Dec. 31 a. Investment accounted for under the equity method S b. Investment measured at PV- Check Income 7,200 $ 24.000 x 157.800 180.000 ✓

Recording Entries for Equity Investment: FV-NI and Equity Method On January 1, Allen Corporation purchased 30% of the 30,000 outstanding common shares f Towne Corporation at $17 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $24,000 and declared and paid dividends of $8,000. As of December 31, common shares of Towne Corporation were trading at $20 per share. Journal Entries with Significant influence Journal Entries without Significant Influence Financial Statement Presentation c. indicate the amount of income that would be reported on the income statement and the investment balance on the year-end balance sheet under requirement (a) and requirement (b). Investment Net Balance Dec. 31 a. Investment accounted for under the equity method S b. Investment measured at PV- Check Income 7,200 $ 24.000 x 157.800 180.000 ✓

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Recording Entries for Equity Investment: FV-NI and Equity Method On January 1, Allen Corporation purchased 30% of the 30,000 outstanding common shares of Towne Corporation at $17 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $24,000 and declared and paid dividends of $8,000. As of December 31, common shares of Towne Corporation were trading at $20 per share. Journal Entries with Significant Influence Journal Entries without Significant Influence Financial Statement Presentation c. Indicate the amount of income that would be reported on the income statement and the investment balance on the year-end balance sheet under requirement (a) and requirement (b). Investment Net Balance Dec. 31 a. Investment accounted for under the equity method $ b. Investment measured at FV-NI Check Income 7,200 $ 24,000 x 157,800✔ 180,000 ✓
Transcribed Image Text:Recording Entries for Equity Investment: FV-NI and Equity Method On January 1, Allen Corporation purchased 30% of the 30,000 outstanding common shares of Towne Corporation at $17 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $24,000 and declared and paid dividends of $8,000. As of December 31, common shares of Towne Corporation were trading at $20 per share. Journal Entries with Significant Influence Journal Entries without Significant Influence Financial Statement Presentation c. Indicate the amount of income that would be reported on the income statement and the investment balance on the year-end balance sheet under requirement (a) and requirement (b). Investment Net Balance Dec. 31 a. Investment accounted for under the equity method $ b. Investment measured at FV-NI Check Income 7,200 $ 24,000 x 157,800✔ 180,000 ✓
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