Journal entries for various methods of accounting for intercorporate investments.

Rockwell Corporation acquired, as long-term investments, shares of common stock of Company R, Company S, and Company T on January 2. These are the only long-term investments in securities that Rockwell Corporation holds. Data relating to the acquisitions follow.

Company Percentage Acquired Book Value and Market Value of Total Net Assets on January 2 Acquisition Cost Net Income for Year Dividends Declared for Year Market Value of Shares Owned on December 31 R

S T

10%

30 100

$6,000,000 6,000,000 6,000,000

$ 648,000 2,040,000 6,000,000

$1,200,000 1,200,000 1,200,000

$480,000 480,000 480,000

$ 624,000 2,052,000 6,300,000

a. Give the journal entries made to acquire the shares of Company R and to account for the investment during the year, using the market value method.

b. Give the journal entries made to acquire the shares of Company S and to account for the investment during the year, using the equity method. Any excess cost relates to goodwill.

The firm neither amortizes any goodwill nor finds it impaired.

c. Give the journal entries made to acquire the shares of Company T and to account for the investment during the year, using the equity method.