Suppose That On January 6, 2018 Northern Motors Paid $220.000.000 For Its 25% Investment In Velocity Motors, Northern Has Significant Influence Over Velocity After The Purchase Assume Velocity Sarned Not Income Of S60,000,000 And Paid Cash Dividends Of S20,000,000 To All Outstanding Stockholders During 2018. (Assume All Outstanding Stack Is Voting Stock.)

 

Suppose that on January 6, 2018, Northern Motors paid $220,000,000 for its 25% investment in Velocity Motors. Northern has significant influence over Velocity after the purchase. Assume Velocity earned net income of $80,000,000 and paid cash dividends of $30,000,000 to all outstanding stockholders during 2018. (Assume all outstanding stock is voting stock.) Read the requirements Requirement 1. What method should Northem Motors use to account for the investment in Velocity Motors? Give your reasoning. Northern Motors should use the method to account for its investment in Velocity Motors because the Investment Requirement 2. Joumalize all required 2018 transactions related to Northern Motors's Velocity investment. Include an explanation for each entry. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, select "No entry required" on the first line of the Accounts and Explanation column and leave the remaining cells blank.) Northern Motors paid $220,000,000 for its 25% investment in Velocity Motors. Date 2018 Jan. 6 Accounts and Explanation Velocity paid cash dividends of $30,000,000 to all outstanding shareholders during 2018. Date 2018 Accounts and Explanation Debit Credit Debit Credit