Question
Exercise 12-25 Fair value option; equity method investments As a long-term investment at the beginning of the fiscal year, Florists International purchased 25% of Nursery
Exercise 12-25 Fair value option; equity method investments
As a long-term investment at the beginning of the fiscal year, Florists International purchased 25% of Nursery Supplies Inc.?s 4 million shares for $30 million. The fair value and book value of the shares were the same at that time. The company realizes that this investment typically would be accounted for under the equity method, but instead chooses the fair value option. During the year, Nursery Supplies earned net income of $20 million and distributed cash dividends of $1.00 per share. At the end of the year, the fair value of the shares is $25 million. |
Required: |
1. | How would this investment be classified on Florists balance sheet? | ||||
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2. | Prepare all appropriate journal entries related to the investment during 2016.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).) |
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