Question

Ravine Corporation purchased 30 percent ownership of Valley Industries for $90,000 on January 1, 20X6, when Valley had capital stock of $240,000 and retained earnings of $60,000. The following data were reported by the companies for the years 20X6 through 20X9:


Required
a. What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment using
(1) The cost method and
(2) The equity method?
b. Give all appropriate journal entries for 20X8 that Ravine made under both the cost and the equitymethods.


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  • CreatedMay 23, 2014
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