Exercise 12-29 (Algorithmic) Equity Method

On January 1, 2018, Core Corporation acquired 40% of the 10,000 outstanding common shares of Prima Foods Inc. for $1,800,000, which equals the book value of Prima. On December 31, 2018, Prima reported a net profit of $440,000 and declared and paid a total dividend to shareholders of $180,000.

Required:

1. Prepare the journal entries made by Core to record the transactions related to its investment in Prima for 2018.

Jan. 1	Investments-Equity Method
	Cash
	(Record purchase of Prima shares)
Dec. 31	Investments-Equity Method
	Investment Income-Equity Method
	(Record share of 2018 profit)
Dec. 31	Cash
	Investments-Equity Method
	(Record share of 2018 dividend)

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Partially correct

2. Give the title and amount of each item (except cash) on the December 31, 2018, statement of financial position and statement of earnings of Core related to its investments in Prima. Name the section of each financial statement in which each item appears.

Core Corporation
December 31, 2018
Statement of Financial Position:
Noncurrent assets:
Investment in associated companies	$
Shareholders Equity:
Retained Earnings	$
Statement of Earnings:
Investment Income-associated companies	$