Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events

Question:

Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events in its long-term investments.
2017
Jan. 5 Selk purchased 60,000 shares (20% of total) of Kildaire's for $1,560,000.
Oct. 23 Kildaire declared and paid a cash of $3.20 per share.
Dec. 31 Kildaire's net income for 2017 is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share.
2018
Oct. 15 Kildaire declared and paid a cash of $2.60 per share.
Dec. 31 Kildaire's net income for 2018 is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share.
2019
Jan. 2 Selk sold all of its investment in Kildaire for $1,894,000 cash.
Part 1
Assume that Selk has a significant influence over Kildaire with its 20% share of stock.
Required
1. Prepare journal entries to record these transactions and events for Selk.
2. Compute the carrying (book) value per share of Selk's investment in Kildaire as reflected
in the investment account on January 1, 2019.
3. Compute the net increase or decrease in Selk's equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire.
Part 2
Assume that although Selk owns 20% of Kildaire's outstanding stock, circumstances indicate that it does not have a significant influence over the investee and that it is classified as an available-for-sale security investment.
Required
1. Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment.
2. Compute the cost per share of Selk's investment in Kildaire as reflected in the investment account on January 1, 2019.
3. Compute the net increase or decrease in Selk's equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire.
Common Stock
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... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...