Accounting for equity investmentsOn January 1, 2018, Bryant, Inc. decides to invest in 3,750 shares of Farrier stock when the stock is selling for $16 per share. On August 1, 2018, Farrier paid a $1.70 per share cash dividend to stockholders. On December 31, 2018, Farrier reports a net income of $50,000 for 2018. Assume Farrier has 15,000 shares of voting stock outstanding during 2018 and Bryant has significant influence over Farrier.RequirementsIdentify what type of investment the Farrier stock is for Bryant.Journalize the transactions related to Bryant’s investment in the Farrier stock during 2018.In what category and at what value would Bryant’s report the investment on the December 31, 2018, balance sheet?

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Asked Jan 11, 2020
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Accounting for equity investments

On January 1, 2018, Bryant, Inc. decides to invest in 3,750 shares of Farrier stock when the stock is selling for $16 per share. On August 1, 2018, Farrier paid a $1.70 per share cash dividend to stockholders. On December 31, 2018, Farrier reports a net income of $50,000 for 2018. Assume Farrier has 15,000 shares of voting stock outstanding during 2018 and Bryant has significant influence over Farrier.

Requirements

  1. Identify what type of investment the Farrier stock is for Bryant.
  2. Journalize the transactions related to Bryant’s investment in the Farrier stock during 2018.
  3. In what category and at what value would Bryant’s report the investment on the December 31, 2018, balance sheet?
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