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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: FVNI and Equity Method
On January Allen Corporation purchased of the outstanding common shares of Towne Corporation at $ 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 $ and declared and paid dividends of $ As of December common shares of
Towne Corporation were trading at $ 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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