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CleanEnergy Corp. is preparing its financial statements for the year ending December 31, 20X1. The company had the following investments and related transactions: On January
CleanEnergy Corp. is preparing its financial statements for the year ending December 31, 20X1. The company had the following investments and related transactions: On January 1, CleanEnergy purchased 8,000 shares of common stock in another company for $240,000 as a long-term investment. On July 1, CleanEnergy received a cash dividend of $2.50 per share from the investee company. By December 31, the fair value of the investment increased to $260,000.
Required:
- Prepare the journal entries for the investment and related transactions during the year.
- Calculate the unrealized gain or loss on the investment as of December 31, 20X1.
- Prepare the balance sheet extract showing the investment at fair value.
- Discuss the impact of the investment’s fair value changes on the company’s financial performance and position.
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