Nelson Corporation owns equity-method investments in several companies. Suppose Nelson paid $1,500,000 to acquire a 25% investment

Question:

Nelson owns equity-method investments in several companies. Suppose Nelson paid $1,500,000 to acquire a 25% investment in Payton Software Company. Payton Software reported net income of $670,000 for the first year and declared and paid cash dividends of $400,000.

Requirements
1. Record the following in Nelsons journal:
(a) Purchase of the investment
(b) Nelsons proportion of Payton Software’s net income
(c) Receipt of the cash dividends.
2. What is the ending balance in Nelsons investment account?

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...