Significant Influence Investment - Prepare all calculations. On January 1, 2020, Joy Inc. paid $900,000 to purchase 30% of Happy Inc's outstanding voting shares. Joy Inc. has significant influence over Happy Inc. Assume that Joy Inc. is using the EQUITY method of accounting for this investment of significant influence. The following took place in 2020: Happy’s earnings for 2020 were $150,000, which included $20,000 (in profits) that resulted from sales of inventory from Joy. Happy has not yet used the inventory purchased from Joy. They will process it next year and the resulting product will be sold to one of Happy’s key customers. Happy declared and paid dividends in the amount of $40,000 during 2020. Required: a) What should be reported as “investment in Happy Inc.” on Joy’s balance sheet as of December 31, 2020? b) prepare all the necessary journal entries for Joy for 2020.
Significant Influence Investment - Prepare all calculations. On January 1, 2020, Joy Inc. paid $900,000 to purchase 30% of Happy Inc's outstanding voting shares. Joy Inc. has significant influence over Happy Inc. Assume that Joy Inc. is using the EQUITY method of accounting for this investment of significant influence. The following took place in 2020: Happy’s earnings for 2020 were $150,000, which included $20,000 (in profits) that resulted from sales of inventory from Joy. Happy has not yet used the inventory purchased from Joy. They will process it next year and the resulting product will be sold to one of Happy’s key customers. Happy declared and paid dividends in the amount of $40,000 during 2020. Required: a) What should be reported as “investment in Happy Inc.” on Joy’s balance sheet as of December 31, 2020? b) prepare all the necessary journal entries for Joy for 2020.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 26E
Related questions
Question
Significant Influence Investment - Prepare all calculations.
On January 1, 2020, Joy Inc. paid $900,000 to purchase 30% of Happy Inc's outstanding voting shares. Joy Inc. has significant influence over Happy Inc. Assume that Joy Inc. is using the EQUITY method of accounting for this investment of significant influence. The following took place in 2020:
- Happy’s earnings for 2020 were $150,000, which included $20,000 (in profits) that resulted from sales of inventory from Joy.
- Happy has not yet used the inventory purchased from Joy. They will process it next year and the resulting product will be sold to one of Happy’s key customers.
- Happy declared and paid dividends in the amount of $40,000 during 2020.
Required:
a) What should be reported as “investment in Happy Inc.” on Joy’s balance sheet as of December 31, 2020?
b) prepare all the necessary
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
