Oliver Corporation has owned stock of Conrad Corporation since 2011. At December 31, 2014, its balances related
Question:
Oliver Corporation has owned stock of Conrad Corporation since 2011. At December 31, 2014, its balances related to this investment were:
Equity Investments $185,000
Fair Value Adjustment (AFS) 34,000 Dr.
Unrealized Holding Gain or Loss—Equity 34,000 Cr.
On January 1, 2015, Oliver purchased additional stock of Conrad Company for $475,000 and now has significant influence over Conrad. If the equity method had been used in 2011–2014, Oliver’s share of income would have been $33,000 greater than dividends received. Prepare Oliver’s journal entries to record the purchase of the investment and the change to the equity method.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield