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Company Orange chooses to value its investments through OCI. In 2018, the company purchased an 10% interest in Green Plant Co. for $100,000, representing a
Company Orange chooses to value its investments through OCI. In 2018, the company purchased an 10% interest in Green Plant Co. for $100,000, representing a $1,000,000 company valuation of Green Plant Co. The following are details of Green Plant Co.'s financial activity: In 2019 Green Plant Co. reported net income of $650,000 and declared a dividend of $100,000. In 2020 Green Plant Co.'s company value increased to $1,200,000 due to new investments in agriculture technology. In 2021 Green Plant Co. declared a dividend of $120,000. At the end of 2021, Company Orange sold their investment in Green Plant Co. for $175,000. Record the journal entries (showing the debits and credits) that Company Orange needs to record in it's financial statements to accurately represent the investment in Green Plant Co. Show your work/calculations to obtain partial marks. Remember to close out OCI at the end of the year for Company Orange. Sample Answer: Year 2018: Dr. XXX Cr. XXX Entry is to represent... =(200,000)*0.10 Student Answer/Response
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