On January 6, Year 1, Bulldog Co. purchased 29% of the outstanding stock of Gator Co. for $179,000. Gator Co. paid total dividends of $19,700 to all shareholders on June 30. Gator Co. had a net loss of $35,800 Year 1. a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Jan. 6 - Purchase fill in the blank f12e39ffe00ff83_2 fill in the blank f12e39ffe00ff83_4 June 30 - Dividend fill in the blank f12e39ffe00ff83_6 fill in the blank f12e39ffe00ff83_8 Dec. 31 - Equity Loss fill in the blank f12e39ffe00ff83_10 fill in the blank f12e39ffe00ff83_12 b. Compute the balance of Investment in Gator Co. Stock on December 31, Year 1. $fill in the blank ead8c9031057025_1 c. How does valuing an investment under the equity method differ from valuing an investment at fair value? Under the method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The method uses market price information to value the investment in the investee.
On January 6, Year 1, Bulldog Co. purchased 29% of the outstanding stock of Gator Co. for $179,000. Gator Co. paid total dividends of $19,700 to all shareholders on June 30. Gator Co. had a net loss of $35,800 Year 1. a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Jan. 6 - Purchase fill in the blank f12e39ffe00ff83_2 fill in the blank f12e39ffe00ff83_4 June 30 - Dividend fill in the blank f12e39ffe00ff83_6 fill in the blank f12e39ffe00ff83_8 Dec. 31 - Equity Loss fill in the blank f12e39ffe00ff83_10 fill in the blank f12e39ffe00ff83_12 b. Compute the balance of Investment in Gator Co. Stock on December 31, Year 1. $fill in the blank ead8c9031057025_1 c. How does valuing an investment under the equity method differ from valuing an investment at fair value? Under the method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The method uses market price information to value the investment in the investee.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 9P
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Question
On January 6, Year 1, Bulldog Co. purchased 29% of the outstanding stock of Gator Co. for $179,000. Gator Co. paid total dividends of $19,700 to all shareholders on June 30. Gator Co. had a net loss of $35,800 Year 1.
a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the
| Jan. 6 - Purchase | fill in the blank f12e39ffe00ff83_2 | ||
| fill in the blank f12e39ffe00ff83_4 | |||
| June 30 - Dividend | fill in the blank f12e39ffe00ff83_6 | ||
| fill in the blank f12e39ffe00ff83_8 | |||
| Dec. 31 - Equity Loss | fill in the blank f12e39ffe00ff83_10 | ||
| fill in the blank f12e39ffe00ff83_12 |
b. Compute the balance of Investment in Gator Co. Stock on December 31, Year 1.
$fill in the blank ead8c9031057025_1
c. How does valuing an investment under the equity method differ from valuing an investment at fair value?
Under the method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The method uses market price information to value the investment in the investee.
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