Question: Assume the same facts as in QS except that the stock acquired represents 40% of TKR Corp.'s outstanding stock. Also assume that TKR Corp. paid a $125,000 dividend on November 1, 2011, and reported a net income of $550,000 for 2011. Prepare the entries to record (a) the receipt of the dividend and (b) the December 31, 2011, year-end adjustment required for the investment account.
QS: On May 20, 2011, Alexis Co. paid $750,000 to acquire 25,000 common shares (10%) of TKR Corp. as a long-term investment. On August 5, 2012, Alexis sold one-half of these shares for $475,000. What valuation method should be used to account for this stock investment? Prepare entries to record both the acquisition and the sale of these shares.