Problem:
Blapper., purchased 10% of Nicks Enterprises for $1,000,000 on January 1, 2013. Nicks recognized a total of $440,000 net income during 2013, paid $40,000 of dividends to Blapperduring 2013, and at December 31, 2013, the market value of the Nicks investment increased to $1,070,000
Required:
Question: Prepare the journal entries necessary to account for the Nicks investment, assuming that Blapper accounts for that investment as (1) an available-for-sale investment, and (2) elects the fair-value option.
Note: Please show how you came up with the solution.