The beginning balance sheet of Evita Corporation included the following: Long-Term Investment in Reading Software (equity-method investment)...................

Question:

The beginning of Evita included the following:
Long-Term Investment in Reading Software (equity-method investment)................... $611,000

Evita completed the following investment transactions during the year:
Mar 16 Purchased 1,600 shares of Lawrence, Inc., as a long-term available-for-sale investment, paying $12.00 per share.
May 21 Received cash of $0.75 per share on the Lawrence investment.
Aug 17 Received cash of $81,000 from Reading Software.
Dec 31 Received annual reports from Reading Software, net income for the year was $560,000. Of this amount Evita’s proportion is 29%.

At year-end, the fair values of Evita’s investments are as follows: Lawrence, $26,000; Reading, $692,000.

Requirements
1. Record the transactions in the journal of Evita Post entries to the T-account for Long-Term Investment in Reading and determine its balance at December 31.
3. Show how to report the Long-Term Available-for-Sale Investments and the Long-Term Investment in Reading accounts on Evita’s at December 31.

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