ABC Corporation acquired a 35% interest in XYZ Company on January 1, 2018, for $750,000. At that time, XYZ had 1,000,000 shares of its $1 par common stock issued and outstanding. During 2018, XYZ paid cash dividends of $240,000 and thereafter declared and issued a 5% common stock dividend when the fair value was $2 per share. XYZ's net income for 2018 was $540,000.

Using the attached T-account template, prepare all necessary entries for ABC Corporation’s “equity method” investment.

Topic REFERENCE: Stockholders Equity, Investments

 

Transcribed Image Text:

Current Assets ASSETS Property, Plant & Equipment Non-current Assets Investments Intangible Assets Other LIABILITIES Current Liabilities Non-Current Liabilities Contributed Capital EQUITY Earned Capital Accumulated OCI Current Assets ASSETS Property, Plant & Equipment Non-current Assets Investments Intangible Assets Other LIABILITIES Current Liabilities Non-Current Liabilities Contributed Capital EQUITY Earned Capital Accumulated OCI

Answer rating: 100% (QA)

Accounst Title Jan 1 2018 Investment in X... View the full answer