At a total cost of $6,300,000, Veravo Corporation acquired 210,000 shares of Strado Corp common stock as a long term investment Veravo Corporation uses the equity method of accounting for this investment Strado Corp has 700,000 shares of common stock outstanding, including the shares acquired by Ve...

a 1 Investment in Strado Corp Stock 258000 Income of Str ...

At a total cost of $6,300,000, Veravo Corporation acquired 210,000 shares of Strado Corp. common stock as

Question:

At a total cost of $6,300,000, Veravo acquired 210,000 shares of Strado Corp. as a long-term investment. Veravo uses the equity method of accounting for this investment. Strado Corp. has 700,000 shares of outstanding, including the shares acquired by Veravo Journalize the entries by Veravo to record the following information:
1. Strado Corp. reports net income of $860,000 for the current period.
2. A cash of $0.32 per common share is paid by Strado Corp. during the current period.
b. Why is the equity method appropriate for the Strado Corp. investment?
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... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...