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 Identify 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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Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.