Ivanhoe Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2017. The purchase price was $1,037,300 for 45,100 shares. Kulikowski Inc. declared and paid an $0.85 per share cash dividend on June 30 and on December 31, 2018. Kulikowski reported net income of $703,000 for 2018. The fair value of Kulikowski's stock was $26 per share at December 31, 2018. Assume that the security is a trading security. Prepare the journal entries for Ivanhoe Inc. for 2017 and 2018, assuming that Ivanhoe cannot exercise significant influence over Kulikowski. (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 o for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Equity Investments 1037300 Cash 1037300 June 30, 2018 4 Cash 38335 Dividend Revenue 38335 Dec. 31, 2018 Cash 38335 Dividend Revenue 38335 (To record dividend.) Equity Investments 135300 Unrealized Holding Gain or Loss -Income 135300 (To record fair value.) Prepare the journal entries for Ivanhoe Inc. for 2017 and 2018, assuming that Ivanhoe can exercise significant influence over Kulikowski. (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 O for the amounts. Date Account Titles and Explanation Debit Credit (To record dividend.) (To record revenue.) At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2018? What is the total net income reported in 2018 under each of these methods? Fair Value Method Equity Method Investment amount (balance sheet) Dividend revenue (income statement) Unrealized holding gain (income statement) Investment income (income statement) Ivanhoe Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2017. The purchase price was $1,037,300 for 45,100 shares. Kulikowski Inc. declared and paid an $0.85 per share cash dividend on June 30 and on December 31, 2018. Kulikowski reported net income of $703,000 for 2018. The fair value of Kulikowski's stock was $26 per share at December 31, 2018. Assume that the security is a trading security. Prepare the journal entries for Ivanhoe Inc. for 2017 and 2018, assuming that Ivanhoe cannot exercise significant influence over Kulikowski. (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 o for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Equity Investments 1037300 Cash 1037300 June 30, 2018 4 Cash 38335 Dividend Revenue 38335 Dec. 31, 2018 Cash 38335 Dividend Revenue 38335 (To record dividend.) Equity Investments 135300 Unrealized Holding Gain or Loss -Income 135300 (To record fair value.) Prepare the journal entries for Ivanhoe Inc. for 2017 and 2018, assuming that Ivanhoe can exercise significant influence over Kulikowski. (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 O for the amounts. Date Account Titles and Explanation Debit Credit (To record dividend.) (To record revenue.) At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2018? What is the total net income reported in 2018 under each of these methods? Fair Value Method Equity Method Investment amount (balance sheet) Dividend revenue (income statement) Unrealized holding gain (income statement) Investment income (income statement)
