Dale Corporation acquired a 35% interest in Roger Inc. for $ 300,000 on January 1 of the

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Dale Corporation acquired a 35% interest in Roger Inc. for $ 300,000 on January 1 of the current year. Specifically, Dale acquired 68,250 of the 195,000 voting common shares outstanding. Roger reported net income of $ 120,000 at the end of the current year and paid cash dividends of $ 36,000 during the current year. At the time of acquisition, the book value of Roger’s net assets equaled its market value. Roger’s shares were selling for $ 6 per share at the end of the current year.
Required
a. Prepare all journal entries required to record the transactions indicated assuming that Dale uses the equity method.
b. Determine the carrying value of the investment at the end of the current year assuming that Dale uses the equity method.
c. Prepare the journal entries required to account for Dale’s investment in Roger assuming that the investment is classified as available- for- sale. Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting

ISBN: 978-0132162302

1st edition

Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

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