Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock for $13,200 (Fairbanks does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Assume the stock is nonmarketable. Prepare Fairbanks’ journal entries torecord (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment, if any.
Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock for $13,200 (Fairbanks does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Assume the stock is nonmarketable. Prepare Fairbanks’ journal entries torecord (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment, if any.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 6MCQ: Ames Corporation repurchases 10,000 shares of its common stock for $12 per share. The shares were...
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Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock for $13,200 (Fairbanks does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share.
Assume the stock is nonmarketable. Prepare Fairbanks’
record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment, if any.
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