A: On January 1st, 2022, Vehicle Inc. bought 5% of the outstanding stock of Bicycle Inc. for $1,000,000. Bicycle Inc. paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use? B: On January 1st, 2022, Vehicle Inc. bought 30% of the outstanding stock of Bicycle Inc. for $6,000,000. Bicycle Inc. also paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use?
A: On January 1st, 2022, Vehicle Inc. bought 5% of the outstanding stock of Bicycle Inc. for $1,000,000. Bicycle Inc. paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use? B: On January 1st, 2022, Vehicle Inc. bought 30% of the outstanding stock of Bicycle Inc. for $6,000,000. Bicycle Inc. also paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method of accounting for equity investments will Vehicle Inc. use?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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A: On January 1st, 2022, Vehicle Inc. bought 5% of the outstanding stock of Bicycle Inc. for
$1,000,000. Bicycle Inc. paid a dividend of $100,000 to all shareholders on December 31st, 2022.
Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all
journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method
of accounting for equity investments will Vehicle Inc. use?
B: On January 1st, 2022, Vehicle Inc. bought 30% of the outstanding stock of Bicycle Inc. for
$6,000,000. Bicycle Inc. also paid a dividend of $100,000 to all shareholders on December 31st, 2022.
Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. Record all
journal entries of Vehicle Inc. with respect to Bicycle Inc.'s stock for the year 2022. What method
of accounting for equity investments will Vehicle Inc. use?
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