Equity Method
Response to the following problem:
The Miller Corporation acquired 30% of the outstanding common stock of the Crowell Corporation for $160,000 on January 1, 2010 and obtained significant influence. The purchase price of the shares was equal to their book value.
During 2010, the following information is available for Crowell:
Mar. 31 Declared and paid a cash dividend of $50,000
June 30 Reported semiannual earnings of $120,000 for the first half of 2010
Sept. 30 Declared and paid a cash dividend of $50,000
Dec. 31 Reported semiannual earnings of $140,000 for the second half of 2010
Required
1. Prepare journal entries for Miller to reflect the preceding information.
2. What is the balance in Miller's investment account on December 31, 2010? (Show your computations.)