Question
1. Equity Securities Significant Influence (Equity Method). Sees Candies bought 40% of Mollys Ice Cream Co. on January 2, 2019 for 60 million. The carrying
1. Equity Securities Significant Influence (Equity Method). Sees Candies bought 40% of Mollys Ice Cream Co. on January 2, 2019 for 60 million. The carrying value of Mollys assets on that date was $100 million. Book value and fair values were the same for all financial statement items except for inventory and buildings, for which fair value exceeded book value by $5 million and $25 million, respectively. All inventory on hand at the date of acquisition was sold during 2019. The buildings have a remaining life of 10 years. During 2019, Molly reported total Net Income of $30 million and paid dividends of $10 million. The Fair Value of the Investment at the end of 2019 was $63 million.
a. Prepare the appropriate journal entries for this investment for 2019. (You can make your JEs in Millions)
i. Journal Entry #1
ii. Journal Entry #2
iii. Journal Entry #3
iv. Journal Entry #4
b. What are the amounts that Sees Candies should report relative to this investment in the following 2019 Financial Statements:
i. Income Statement
ii. Balance Sheet
iii. Statement of Cash Flows
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