On January 1, 2014, Unique Limited, a private company, buys 25% of Walla Walla Corporation's 200,000 common shares for $480,000. On December 31, 2014, Walla Walla pays a $35,000 cash dividend and reports profit of $280,000. At December 31, 2014, Walla Walla's shares are trading at $12.50 per share. Both companies have a December 31 year end. Unique has significant influence over Walla Walla.
Instructions
(a) Record the above transactions assuming Unique uses the equity method to report its investment in Walla Walla.
(b) Determine the amounts to be reported on Unique's balance sheet and income statement for its investment in Walla Walla shares at December 31.
(c) Repeat parts (a) and (b) assuming Unique has elected not to use the equity method for significant influence investments.
(d) Repeat parts (a) and (b) assuming Unique has elected not to use the equity method for significant influence investments. Assume that Walla Walla shares are not publicly traded and that no quoted market price is available.