Change to Equity Method On January 1, 2019, Lion Company paid $600,000 for 10,000 shares of Wolf Company’s voting common stock, which was a 10% interest in Wolf. Lion does not have the ability to exercise significant influence over the operating and financial polices of Wolf. Lion received dividends of $1.00 per share from Wolf on October 2, 2019. Wolf reported net income of $400,000 for the year ended December 31, 2019, and the ending market price of its shares was $63.
On July 2, 2020, Lion paid $1,950,000 for 30,000 additional shares of Wolf’s voting common stock, which represents a 30% investment in Wolf. The fair values of all of Wolf’s assets, net of liabilities, were equal to their book values of $6,500,000. As a result of this transaction, Lion has the ability to exercise significant influence over the operating and financial policies of Wolf. Lion received dividends of $1.00 per share from Wolf on April 2, 2020, and $1.35 per share on October 1, 2020. Wolf reported net income of $500,000 for the year ended December 31, 2020, and $200,000 for the 6 months ended December 31, 2020.
Required:
Corporate Financial Accounting
Financial And Managerial Accounting
Accounting Information Systems
Financial Accounting
Financial & Managerial Accounting
Managerial Accounting: The Cornerstone of Business Decision-Making
College Accounting, Chapters 1-27
Principles of Economics (MindTap Course List)
MKTG 12:STUDENT ED.-TEXT
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
Management, Loose-Leaf Version
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Fundamentals of Financial Management (MindTap Course List)
Accounting Information Systems
Principles of Microeconomics (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Essentials of Economics (MindTap Course List)
Contemporary Marketing
Principles of Macroeconomics (MindTap Course List)
Foundations of Business (MindTap Course List)
Accounting (Text Only)
Financial Accounting
Financial & Managerial Accounting
College Accounting (Book Only): A Career Approach
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Exploring Economics
Statistics for Business & Economics, Revised (MindTap Course List)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
College Accounting (Book Only): A Career Approach
Principles of Macroeconomics (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Fundamentals of Financial Management (MindTap Course List)
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Corporate Financial Accounting
Survey of Accounting (Accounting I)
Purchasing and Supply Chain Management
Practical Management Science
Microeconomics
Economics (MindTap Course List)
Economics For Today
Macroeconomics
Cornerstones of Cost Management (Cornerstones Series)
Managerial Accounting
Cornerstones of Financial Accounting
Micro Economics For Today
Microeconomics: Private and Public Choice (MindTap Course List)
Principles of Microeconomics
Macroeconomics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
Understanding Management (MindTap Course List)