Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2011, Brooks purchased 15,000 shares of Tom for $490,000, giving Brooks a 10 percent ownership. On January 1, 2012 Brook purchased 10,000

On January 1, 2011, Brooks purchased 15,000 shares of Tom for $490,000, giving Brooks a 10 percent ownership. On January 1, 2012 Brook purchased 10,000 shares giving Brook an additional 20 percent ownership, for which Brook paid 980,000. This latest purchase gave Brook the ability to apply significant influence over Tom. The original purchase was classified as an available-for-sale investment. Any excess of cost over book value acquired for either investment was attributed to goodwill. the book value of Tom was January 1, 2011 was 3,400,000. On January 1, 2013, Brook sold 6,500 shares of Tom for $30.00 per share. Tom reported income for 2013 and 2014 of $240,000 and $370,000 respectively. Tom also paid dividends in 2013 and 2014 of $130,000 and $178,200 respectively.

A.What is the investment balance at December 31, 2013

B.) What are the journal entries to record the sale of the 6,500 shares of Tom

. )

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting for Non-Accounting Students

Authors: John R. Dyson

8th Edition

273722972, 978-0273722977

More Books

Students also viewed these Accounting questions

Question

Define Administration?

Answered: 1 week ago