Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 4, Problem 7Q
To determine
Explain the manner in which Company T account for the previous 10 percent ownership interest.
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Swifty Corporation purchased a 20% interest in Moss Inc. for $280. This investment gave Swifty significant influence over Moss. During the year, Moss earned net income of $15 and paid
dividends of $5. Assuming the purchase price was equal to 20% of Moss's net carrying amount when it was acquired.
Prepare Swifty's journal entries related to this investment using the equity method. Swifty applies IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Account Titles and Explanation
(To record investment purchase)
(To record investment income)
(To record collection of dividend)
Debit
Credit
Chapter 4 Solutions
Advanced Accounting
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