On January 3, 2019. Cullumber Company purchased for $505.000 casha 10% interest in Riverbed Corp. (Accounted for as Available-for-Sale Investments). The fair value of Cullumber's investment in Riverbed securities is as follows: December 31, 2019, $565,000, andDecember 31, 2020, $522,000. On January 2, 2021, Cullumber purchased an additional 30% of Riverbed's stock for $1560,000 cashwhen the book value of Riverbed's net assets was $4,186,000. The excess was attributable to depreciable assets having a remaininglife of 8 years.During 2019, 2020, and 2021. the following occurred.RiverbedDividends Paid byNet IncomeRiverbed to Cullumber2019$353,000$15.0002020448,00018,0002021549,00070,000On the books of Cullumber Company, prepare all journal entries in 2019, 2020, and 2021 that relate to its investment in RiverbedCorp, reflecting the data above and a change from the fair value method to the equity method. (Credit account titles are automaticallyindented when amount is entered. Do not indent manualy. If no entry is required, select "No Entry" for the account titles and enter Ofor theamounts.)DateAccount Titles and ExplanationDebitCreditJan. 3. 2019Equity Investments (Available-for-Sale)Cash(To record the purchase of a 10%interest in Riverbed Corp.)Dec. 31. 2019CashDividend Revenue(To record the receipt of cashdividends from Riverbed Corp.)Fair Value AdjustmentUnrealized HHolding Gain or Loss-Equity(To adjust fair value.)Dec. 31. 2020CashDividend Revenue(To record the receipt of cashdividends from Riverbed Corp.)Unrealized Holding Gain or Loss-EquityFair Value Adjustment(To adjust fair value.)Jan. 2, 2021Equity Investments (Equity Method)Cash(To record additional purchase.)Jan. 2. 2021Equity Investments (Equity Method)Equity Investments (Available-for-Sale)(To reclassify investment.)Unrealized Holding Gain or Loss-EquityFair Value Adjustment(To eliminate accounts and balancesused under fair value method accounting.)Dec. 31, 2021 vEquity Investments (Equity Method)Investment Revenue(To record equity in net income of Riverbed.)CashEquity Investments (Equity Method)(To record the receipt of cash dividendsfrom Riverbed Corp.)

Here discuss about the accounting treatment of the Equity investment which are classified for the…

On January 3. 2019. Cullumber Company purchased for $s05.000 cash a 10% interest in Riverbed Corp. Accounted for as Available- for-Sale Investments). The fair value of Cullumber's investment in Riverbed securities is as follows: December 31, 2019. S565.000, and December 31. 2020. S522.000. On January 2. 2021. Cullumber purchased an additional 30% of Riverbed's stock for $1.560.000 cash when the book value of Riverbed's net assets was $4.186.000. The excess was attributable to depreciable assets having a remaining ife of 8 years. During 2019, 2020, and 2021. the following occurred. Riverbed Dividends Paid by Net Income Riverbed to Cullumber 2019 $353.000 $15000 2020 448.000 18.000 2021 549.000 70.000 On the books of Cullumber Company, prepare all journal entries in 2019, 2020, and 2021 that relate to its investment in Riverbed Corp, reflecting the data above and a change from the fair value method to the equity method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts.)

On January 3. 2019. Cullumber Company purchased for $s05.000 cash a 10% interest in Riverbed Corp. Accounted for as Available- for-Sale Investments). The fair value of Cullumber's investment in Riverbed securities is as follows: December 31, 2019. S565.000, and December 31. 2020. S522.000. On January 2. 2021. Cullumber purchased an additional 30% of Riverbed's stock for $1.560.000 cash when the book value of Riverbed's net assets was $4.186.000. The excess was attributable to depreciable assets having a remaining ife of 8 years. During 2019, 2020, and 2021. the following occurred. Riverbed Dividends Paid by Net Income Riverbed to Cullumber 2019 $353.000 $15000 2020 448.000 18.000 2021 549.000 70.000 On the books of Cullumber Company, prepare all journal entries in 2019, 2020, and 2021 that relate to its investment in Riverbed Corp, reflecting the data above and a change from the fair value method to the equity method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts.)

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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