Assume the same facts as in QS15 8 except that the stock acquired represents 40% of ORD Corp.'s outstanding stock. Also assume that ORD Corp. paid a $ 100,000 dividend on November 1, 2013, and reported a net income of $ 700,000 for 2013. Prepare the entries to record
(a) The receipt of the dividend
(b) The December 31, 2013, year end adjustment required for the investment account.
In QS15 8, On May 20, 2013, Montero Co. paid $ 1,000,000 to acquire 25,000 common shares (10%) of ORD Corp. as a long term investment. On August 5, 2014, Montero sold one half of these shares for $ 625,000. 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.