Fair Value and Equity Methods Nadal Corporation purchased 10.000 shares of Cutler Inc.’s common stock, on January 1, 2019, for S 100.000. During 2019, Cutler declared and paid cash dividends to Nadal in the amount of S8.000. Nadal’s share of Cutler’s net income for 2019 was $12,400. At December 31, 2019, the fair value of 10.000 shares of Cutler’s common stock, was S120.000. This is Nadal’s only investment. Required: 1. Assume that Cutler has 75.000 shares of common stock outstanding. What journal entries will Nadal make during 2019 relative to this investment? 2. Assume that Cutler has 40.000 shares of common stock outstanding. What journal entries will Nadal make during 2019 relative to this investment?

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter A2, Problem 23E
Textbook Problem

Fair Value and Equity Methods

Nadal Corporation purchased 10.000 shares of Cutler Inc.’s common stock, on January 1, 2019, for S 100.000. During 2019, Cutler declared and paid cash dividends to Nadal in the amount of S8.000. Nadal’s share of Cutler’s net income for 2019 was $12,400. At December 31, 2019, the fair value of 10.000 shares of Cutler’s common stock, was S120.000. This is Nadal’s only investment.

Required:

1. Assume that Cutler has 75.000 shares of common stock outstanding. What journal entries will Nadal make during 2019 relative to this investment?

2. Assume that Cutler has 40.000 shares of common stock outstanding. What journal entries will Nadal make during 2019 relative to this investment?

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Chapter A2 Solutions

Cornerstones of Financial Accounting
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