eBook Show Me How Calculator Entries for equity investments: 20%-50% ownership At a total cost of $1,192,800, Herrera Corporation acquired 84,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 300,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $2,150,000 for the current period. Investment in Tran Corp. Stock Income of Tran Corp. Feedback 2. A cash dividend of $1.40 per common share is paid by Tran Corp. during the current period. Cash Investment in Tran Corp. Stock Feedback b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount between 20% and 50% of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor can exercise significant influence over the investee. Feedback Feedback Check My Work Previous Next >