On January 1, 2012, Snow Corporation purchased 20% of the 200,000 outstanding shares of common stock of
Question:
On January 1, 2012, Snow Corporation purchased 20% of the 200,000 outstanding shares of common stock of Garvey Company for $4.00 per share as a long-term investment. The purchase price of the shares was equal to their book value. The following information is available about Garvey for 2012 and 2013:
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Required:
1. Prepare journal entries to record this information, assuming:
a. Snow uses the fair value method and the securities are classified as available-for-sale.
b. Snow uses the equity method.
2. Assume 10,000 of the Garvey shares are sold on January 4, 2014, by Snow for $4.25 per share. Prepare the journal entry for this sale, assuming:
a. Snow uses the fair value method and the securities are classified as available-for-sale.
b. Snow uses the equity method.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...
Step by Step Answer:
1 a 2012 Jan 1 Investment in AvailableforSale Securities 160000 Cash 40000 x 400 160000 Dec 31 Cash 6000 Dividend Income 30000 x 020 6000 31 Unrealize...View the full answer
Intermediate Accounting Reporting and Analysis
ISBN: 978-1111822361
1st edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
