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Cost $124,000 263.000 $387.000 1,000 shares of Stryker Corp., common 3,000 shares of Medtronic, Inc., common Larson Company's ownership percentage in Stryker Corp and Medtronic, Inc. is 5% and 7%, respectively. Accordingly, Larson Company does not have significant influence over either of these equity investments. On October 1, 2019, Larson Company received a $10,000 dividend from Medtronic, Inc. Furthermore, as of December 31, 2019, the fair values of Larson Company's equity securities are as follows: Cost $124,000 263.000 $387.000 Fair Value $115,000 250.000 $365.000 1,000 shares of Stryker Corp., Common 3,000 shares of Medtronic, Inc., Common Prepare general journal entries for the following transactions: a) June 1, 2019 equity securities acquisition. b) October 1, 2019 dividend received from Medtronic, Inc. c) December 31, 2019 adjusting journal entry to record the change in fair value, if any.

Cost $124,000 263.000 $387.000 1,000 shares of Stryker Corp., common 3,000 shares of Medtronic, Inc., common Larson Company's ownership percentage in Stryker Corp and Medtronic, Inc. is 5% and 7%, respectively. Accordingly, Larson Company does not have significant influence over either of these equity investments. On October 1, 2019, Larson Company received a $10,000 dividend from Medtronic, Inc. Furthermore, as of December 31, 2019, the fair values of Larson Company's equity securities are as follows: Cost $124,000 263.000 $387.000 Fair Value $115,000 250.000 $365.000 1,000 shares of Stryker Corp., Common 3,000 shares of Medtronic, Inc., Common Prepare general journal entries for the following transactions: a) June 1, 2019 equity securities acquisition. b) October 1, 2019 dividend received from Medtronic, Inc. c) December 31, 2019 adjusting journal entry to record the change in fair value, if any.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 23E
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Larson Company Purchased the following securities on March 1, 2019: Cost $124,000 263,000 $387.000 1,000 shares of Stryker Corp., common 3,000 shares of Medtronic, Inc., common Larson Company's ownership percentage in Stryker Corp and Medtronic, Inc. is 5% and 7%, respectively. Accordingly, Larson Company does not have significant influence over either of these equity investments. On October 1, 2019, Larson Company received a $10,000 dividend from Medtronic, Inc. Furthermore, as of December 31, 2019, the fair values of Larson Company's equity securities are as follows: Cost $124,000 263,000 $387.000 Fair Value 1,000 shares of Stryker Corp., Common 3,000 shares of Medtronic, Inc., Common $115,000 250,000 $365.000 Prepare general journal entries for the following transactions: a) June 1, 2019 equity securities acquisition. b) October 1, 2019 dividend received from Medtronic, Inc. c) December 31, 2019 adjusting journal entry to record the change in fair value, if any. Date Account Debit Credit
Transcribed Image Text:Larson Company Purchased the following securities on March 1, 2019: Cost $124,000 263,000 $387.000 1,000 shares of Stryker Corp., common 3,000 shares of Medtronic, Inc., common Larson Company's ownership percentage in Stryker Corp and Medtronic, Inc. is 5% and 7%, respectively. Accordingly, Larson Company does not have significant influence over either of these equity investments. On October 1, 2019, Larson Company received a $10,000 dividend from Medtronic, Inc. Furthermore, as of December 31, 2019, the fair values of Larson Company's equity securities are as follows: Cost $124,000 263,000 $387.000 Fair Value 1,000 shares of Stryker Corp., Common 3,000 shares of Medtronic, Inc., Common $115,000 250,000 $365.000 Prepare general journal entries for the following transactions: a) June 1, 2019 equity securities acquisition. b) October 1, 2019 dividend received from Medtronic, Inc. c) December 31, 2019 adjusting journal entry to record the change in fair value, if any. Date Account Debit Credit
Expert Solution
Step 1

Investment in other company is shown as asset in investor company financial statement. The method of accounting or recording is depend on the size of investment.

When the investor company has not significant influence on the decisions of investee company, then the investment is accounted with cost method or fair value method.

In simple, when investor holds less than 20% voting powers then the investment is accounted on the cost basis or fair market value basis.

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