Century Corporation acquired 8,400 common shares of Fidelity Company on January 10, 2012, for $12 per share

Question:

Century Corporation acquired 8,400 common shares of Fidelity Company on January 10, 2012, for $12 per share and acquired 15,000 common shares of Essem Corporation on January 25, 2012, for $22 per share. Fidelity has 60,000 shares of common stock outstanding, and Essem has 50,000 shares outstanding. At December 31, 2012, the following information was obtained about the operations of Fidelity and Essem:

Fidelity Essem S100,000.00 1.00 20.00 Net income. Dividends paid per share Market value per share at December 31, 2012 S

Assume that Century exerted significant influence over the policies of Essem, but influenced the policies of Fidelity only to a very limited extent. Century classified its investment in Fidelity as an available-for-sale security.
Required:
1. How should Century account for its investments in Essem?
2. Prepare the journal entries for each investment for the year 2012 using the method or methods you selected in part (1) forEssem.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...