Question
On June 1, 2020, Smith Inc. acquired 1,500 shares of Weston Ltd. for $100,000. This investment represents a 12% interest in Weston Ltd. and Smith
On June 1, 2020, Smith Inc. acquired 1,500 shares of Weston Ltd. for $100,000. This investment represents a 12% interest in Weston Ltd. and Smith Inc. has significant influence.
On December 31, 2020, Weston Ltd. paid a $50,000 dividend to its shareholders. At June 30, 2021, Weston Ltd.'s shares were valued at $40 per share and Weston Ltd. reported net income of $50,000 for the year.
On August 15, 2021, Smith Inc. sold the shares for $50,000. Both Smith Inc. and Weston Ltd. have June 30, 2021, year-ends.
Required: Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal.
Ignore income taxes. Journal entry descriptions are optional.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started