Volkswagen Scandal: An Admission to Emission Fraud AAA Chapter Review 1-6a Questions for Discussion 1. Explain how the culture of Volkswagen created this ethical scandal 2. While Volkswagen claimed to support ethics and sustainability, how can they recover from this ethical disaster? 3. Do you believe this scandal will lead to tougher scrutiny of companies' environmental claims in the future? Why or why not? 100 delete 5 6 8 9 o backspace TH lock T Y U O E 7 home H J K . L Equity method journal entries (price greater than book value) An investor purchases a 30% interest in an investee company, and the investor concludes that it can ever significant influence over the investee. The book value of the investee's Stockholders' Equity on the acquisition date is $1,000,000, and the investor purchases its 30 interest for $390,000. The investor is willing to pay the purchase price because the investee owns an unrecorded internally developed patent that the investor estimates is worth $300,000. The patent has a remaining useful life of 10 years. Subsequent to the acquisition, the investee reports net income of $225,000, and pays a cash dividend to the investor of $13.000. At the end of the first year, the investor sells the Equity Investment for 5487.500. Prepare all of the required journal entries to account for this Equity Investment during the year. General Journal Description Debit Credit To record purchase of investment To record equity income To record rete ot of cash dividend. Volkswagen Scandal: An Admission to Emission Fraud AAA Chapter Review 1-6a Questions for Discussion 1. Explain how the culture of Volkswagen created this ethical scandal 2. While Volkswagen claimed to support ethics and sustainability, how can they recover from this ethical disaster? 3. Do you believe this scandal will lead to tougher scrutiny of companies' environmental claims in the future? Why or why not? 100 delete 5 6 8 9 o backspace TH lock T Y U O E 7 home H J K . L Equity method journal entries (price greater than book value) An investor purchases a 30% interest in an investee company, and the investor concludes that it can ever significant influence over the investee. The book value of the investee's Stockholders' Equity on the acquisition date is $1,000,000, and the investor purchases its 30 interest for $390,000. The investor is willing to pay the purchase price because the investee owns an unrecorded internally developed patent that the investor estimates is worth $300,000. The patent has a remaining useful life of 10 years. Subsequent to the acquisition, the investee reports net income of $225,000, and pays a cash dividend to the investor of $13.000. At the end of the first year, the investor sells the Equity Investment for 5487.500. Prepare all of the required journal entries to account for this Equity Investment during the year. General Journal Description Debit Credit To record purchase of investment To record equity income To record rete ot of cash dividend
