Question
PepsiCo, Inc. acquired 45% of the outstanding common stock of Starbucks Corporation for $500,000 cash. Starbucks Corporation reported net income of $200,000 for the year.
PepsiCo, Inc. acquired 45% of the outstanding common stock of Starbucks Corporation for $500,000 cash. Starbucks Corporation reported net income of $200,000 for the year. Requirements: a. Prepare the journal entry to record the investment in Starbucks Corporation by PepsiCo, Inc. b. Determine the amount of income recognized by PepsiCo, Inc. from its investment in Starbucks Corporation. c. Record the receipt of dividends by PepsiCo, Inc. if Starbucks Corporation declared a $0.50 dividend per share. d. Calculate the carrying value of the investment at the end of the year. e. Analyze the impact of the investment on the income statement and balance sheet of PepsiCo, Inc.
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