On March 31, 2024, Chow Brothers, Inc., bought 10% of KT Manufacturings capital stock for $50 million.
Question:
On March 31, 2024, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’s net income for the year ended December 31, 2024, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2024. KT did not declare or pay a dividend during 2024.
Required:
1. Prepare all appropriate journal entries related to the investment during 2024.
2. Assume that Chow sold the stock on January 20, 2025, for $30 million. Prepare the journal entry Chow would use to record the sale.
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Requirement 1 Purchase in millions Investment in equity securities 50 Cash 50 Net income No entry Di...View the full answer
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