Carla Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2017. The purchase price was $1,305,200 for 50,200 shares. Kulikowski Inc. declared and paid an $0.75 per share cash dividend on June 30 and on December 31, 2018. Kulikowski reported net income of $763,000 for 2018. The fair value of Kulikowskis stock was $29 per share at December 31, 2018. Assume that the security is a trading security.

Prepare the journal entries for Carla Inc. for 2017 and 2018, assuming that Carla cannot exercise significant influence over Kulikowski.

Prepare the journal entries for Carla Inc. for 2017 and 2018, assuming that Carla can exercise significant influence over Kulikowski.

At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2018? What is the total net income reported in 2018 under each of these methods?

Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Equity Investments 1,305,200 Cash 1,305,200 June 30, 2018 Cash 37650 Dividend Revenue 37650 Dec. 31, 2018 Cash 37650 Dividend Revenue (To record dividend.) Fair Value Adjustment 37650 150600 Unrealized Holding Gain or Loss Equity 150600 (To record fair value.)