On January 1, Pembina Corporation, a publicly traded company, purchased 20% of Hook Ltd.'s common shares for $777,000. At December 26, Hook declared a $44,000 dividend (Pembina received its share of that dividend on the same day) and reported net income of $72,000. The shares' fair value at December 31 was $821,000. (a) Record each of these transactions, assuming Pembina has significant influence over Hook and is using the equity method to account for this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)
On January 1, Pembina Corporation, a publicly traded company, purchased 20% of Hook Ltd.'s common shares for $777,000. At December 26, Hook declared a $44,000 dividend (Pembina received its share of that dividend on the same day) and reported net income of $72,000. The shares' fair value at December 31 was $821,000. (a) Record each of these transactions, assuming Pembina has significant influence over Hook and is using the equity method to account for this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 36P
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Transcribed Image Text:On January 1, Pembina Corporation, a publicly traded company, purchased 20% of Hook Ltd.'s common shares for $777,000. At
December 26, Hook declared a $44,000 dividend (Pembina received its share of that dividend on the same day) and reported net
income of $72,000. The shares' fair value at December 31 was $821,000.
(a) Record each of these transactions, assuming Pembina has significant influence over Hook and is using the equity method to account
for this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the
order presented in the problem.)
Date
Account Titles and Explanation
(b) How much income would Pembina report because of its investment in Hook?
Income
$
Debit
Credit
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