Question
During the prior year, the company purchased 10% of the common shares of Crispy Cones (CC), a producer of waffle ice cream cones, for $200,000.
During the prior year, the company purchased 10% of the common shares of Crispy Cones (CC), a producer of waffle ice cream cones, for $200,000. The shares of CC are not publicly traded, and the purchase price was established as five times the net income of $40,000. The past fiscal year has proved to be a challenge for CC due to increased competition, commodity price inflation, and an inability to raise prices due to limits on consumer discretionary spending. CCs most recent financial statements report reveals a net income of $27,500. What are the correct journal entry or enties?
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