Roller Corporation purchased 20 percent ownership of Steam Company on January 1, 20X5, for $70,000. On that
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Roller Corporation purchased 20 percent ownership of Steam Company on January 1, 20X5, for $70,000. On that date, the book value of Steam's reported net assets was $200,000. The excess over book value paid is attributable to depreciable assets with a remaining useful life of 10 years. Net income and dividend payments of Steam in the following periods were:
Required
Prepare journal entries on Roller Corporation's books relating to its investment in Steam Company for each of the three years, assuming it accounts for the investment using (a) the cost method and (b) the equity method.
Transcribed Image Text:
Winston Corporation Year Operating Income Dividends 20X2 20X3 20X4 $100,000 60,000 250,000 $ 40,000 80,000 120,000 Fullbright Company Net Income $70,000 40,000 25,000 Dividends $30,000 60,000 50,000
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a Cost Method Date Account Debit Credit January 1 20X5 Investment in Steam Company 70000 Cash Decemb...View the full answer
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Related Book For
Advanced Financial Accounting
ISBN: 978-0073526911
8th Edition
Authors: Richard Baker, Valdean Lembke, Thomas King, Cynthia Jeffrey
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