Journal entries for fair value-equity methods


Task: (Journal Entries for Fair Value and Equity Methods)

Situation 1:

Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2007. On June 30, Martinez declared and paid a $75,000 cash dividend. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. The securities are classified as available-for-sale.

Situation 2:

Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2007. On June 15, Seles declared and paid a cash dividend of $36,000. On December 31, Seles reported a net income of $85,000 for the year.

Prepare all necessary journal entries in 2007 for both situations.

Solution Preview :

Prepared by a verified Expert
Accounting Basics: Journal entries for fair value-equity methods
Reference No:- TGS01880628

Now Priced at $25 (50% Discount)

Recommended (96%)

Rated (4.8/5)