Part A: The following questions are worth 10 points each. Show all of your work. 1. On January 1, 2018, American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $210,000 cash. On that date, Short's book value and fair value were both $840,000. The equity method is deemed appropriate for this investment. Short's net income reported on December 31, 2018 was $80,000. During 2018, Short also paid cash dividends in the amount of $24,000. Required: Prepare the journal entries necessary to record the above information on American Corporation's books during 2018 2. In its 2018 annual report to shareholders, Ank-Morpork Times Inc, included the following disclosure Revenue Recognition Advertising revenue is recognized when advertisements are published, broadcast, or placed on the company's websites, net of provisions for estimated rebates, or credit and rate adjustments and discounts. Circulation revenue includes single-copy and home-delivery subscription revenue. Single-copy revenue is recognized based on date of publication and net of provisions for related returns. Proceeds from home-delivery subscriptions and related costs, principally agency commissions are deferred at the time of sale and are recognized in earnings on a pro rata basis over the terms of the subscriptions. Other revenue is recognized when the related service or product has been delivered. (Continued on reverse sce) 0614522 June 12 2020 Intermediate Accounting 2