Question
On January 1, 2018, Company X acquires 40 percent of the voting stock of Company Y for $2,000,000. Company Y reports net income of $500,000
On January 1, 2018, Company X acquires 40 percent of the voting stock of Company Y for $2,000,000. Company Y reports net income of $500,000 for 2018 and pays dividends of $100,000. Company X uses the equity method to account for the investment.
Prepare the journal entries to record the acquisition, recognize the share of net income, and receive dividends in 2018.
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
