Accounting for Investments Using the Equity Method
Response to the following problem:
Manwill Company owns 40% (30,000 shares) of Hall Company's voting stock. Since Manwill has a significant interest in Hall Company, it uses the equity method of accounting for the investment. Hall Company reported the following information for the year:
1. Hall reported net income of $80,000.
2. Hall paid dividends of $20,000.
3. Hall's stock value increased from $40 to $45
Make the necessary journal entry(ies) to record the change in value of Manwill Company's investment in Hall Company.