- Accounting for Investment Transactions

Part 13 - Subsection (a)

Emily Incorporated buys 20 percent(150,000 shares) of the capital stock of Dono Corporation on January 1, 2013, for $2,900,000. Emily Inc plans to hold these shares for an indefinite period of time. These shares do not give Emily Inc the ability to apply significant influence over Dono Corp.

Using the information given above prepare the applicable journal entries for transactions (1) through (5) below:

Prepare the entry to account for the acquisition of 20 percent(1500,0000 shares) of Dono Corps capital stock.

March 31, 2013 Dono Corp stock is trading at $25 a share.

On December 31, 2013 Dono Corp reports $1,500,000 in net income.

On January 1, 2014 Emily Incorporated receives a cash dividend of $300,000($2 per share) on the Dono Corp Investment.

On March 31, 2014 Emily Incorporated sold all shares of Dono Corp Stock at the current spot rate of $27.50 per share.

Unrealized Gains/Loss

Investment