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Recording Entries for Equity Investment: FV - NI and Equity Method On January 1 , Allen Corporation purchased 3 0 % of the 1 8

Recording Entries for Equity Investment: FV-NI and Equity Method
On January 1, Allen Corporation purchased 30% of the 18,000 outstanding common shares of Towne Corporation at $17 per share as a long-
term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the
year, Towne Corporation reported net income of $14,400 and declared and paid dividends of $4,800. As of December 31, common shares of
Towne Corporation were trading at $20 per share.
b. Assume that Allen Corporation did not have significant influence over Towne Corporation. Record the entries to record the purchase of the
investment, the receipt of declared dividends, and the fair value adjustment.
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