As a long-term investment at the beginning of the fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.25 per share. At the end of the year, the fair value of the shares is $52 million. Required: Prepare the appropriate journal entries from the purchase through the end of the year.

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Asked Jan 17, 2020
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As a long-term investment at the beginning of the fiscal year, Florists International purchased 30% of Nursery Supplies Inc.’s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.25 per share. At the end of the year, the fair value of the shares is $52 million. Required: Prepare the appropriate journal entries from the purchase through the end of the year.

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Expert Answer

Step 1

Prepare the journal to record from the purchase to the end of the year.

Accounting homework question answer, step 1, image 1
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Step 2

Assuming there is a significant influence, of the purchase of the common shares of Company NS, the following journal entries are recorded:

 

  • Purchase of the common shares of Company...

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