Exercise 22-23

Sandhill Corp. was a 30% owner of Teal Company, holding 216,000 shares of Teals common stock on December 31, 2019. The investment account had the following entries.

Investment in Teal
1/1/18 Cost		$3,050,000	12/6/18 Dividend received		$150,000
12/31/18 Share of income		400,000	12/5/19 Dividend received		240,000
12/31/19 Share of income		500,000

On January 2, 2020, Sandhill sold 108,000 shares of Teal for $3,360,000, thereby losing its significant influence. During the year 2020, Teal experienced the following results of operations and paid the following dividends to Sandhill.

		Teal Income (Loss)		Dividends Paid to Sandhill
2020		$310,000		$47,000

At December 31, 2020, the fair value of Teal shares held by Sandhill is $1,820,000. This is the first reporting date since the January 2 sale. (b) Compute the carrying amount of the investment in Teal as of December 31, 2020 (prior to any fair value adjustment).

Carrying amount

$

(c) Prepare the adjusting entry on December 31, 2020, applying the fair value method to Sandhills long-term investment in Teal Company securities. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020