Jungleland, Inc., acquired 1,000 of the 4,000 shares of Clemmons Corporation for $300 each on January 1,2024
Question:
Jungleland, Inc., acquired 1,000 of the 4,000 shares of Clemmons Corporation for
$300
each on January 1,2024 . The book value of Jungleland's share of Clemmons's identiflable net assets was
$275,000
on that date.
$20,000
of the additional
$25,000
pald by Jungleland was due to an asset with a 10-year estimated life and the remaining
$5,000
was due to undervalued land held by Clemmons.\ Clemmons reported a net income of
$100,000
on its 2024 GAAP income statement. In addition, Clemons paid dividends of
$40,000
.\ Clemmons's stock was trading at a price of
$295
per share on December
31,2024
.\ Required:\ a. Prepare the journal entries necessary to account for the Clemmons investment, assuming that Jungleland accounts for that investment as an equity-method investment.\ b. Prepare the journal entries necessary to account for the Blue investment, assuming that Jungleland uses the fair value through net income option.\ c. What amount will be reported for the investment, on Jungleland's balance sheet, under the equity method?\ d. What amount will be reported for the investment, on Jungleland's balance sheet, under the fair value through income statement option?
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik