Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

On January 1, 2019, Mojito Corporation purchased 26% (30,000 shares) of the outstanding stock of Dulcinea Corporation for $175,000. During 2019, Dulcinea Corporation paid total

image text in transcribed
On January 1, 2019, Mojito Corporation purchased 26% (30,000 shares) of the outstanding stock of Dulcinea Corporation for $175,000. During 2019, Dulcinea Corporation paid total dividends of $85,000 and earned $135,000 in net income. At the end of 2019, Dulcinea Corporation's stock had a fair market value of $6 per share. Required: a. Prepare the journal entries that Mojito would make during 2019 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (i.e. fair value method). They are using the fair value method. b. Prepare the journal entries that Mojito would make during 2019 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Fundamentals of Cost Accounting

Authors: William Lanen, Shannon Anderson, Michael Maher

3rd Edition

9780078025525, 9780077517359, 77517350, 978-0077398194

Students also viewed these Accounting questions