Jungleland, Inc., acquired 1,000 of the 4,000 shares of Clemmons Corporation for

$300

each on January 1,2024 . The book value of Jungleland's share of Clemmons's identiflable net assets was

$275,000

on that date.

$20,000

of the additional

$25,000

pald by Jungleland was due to an asset with a 10-year estimated life and the remaining

$5,000

was due to undervalued land held by Clemmons.\ Clemmons reported a net income of

$100,000

on its 2024 GAAP income statement. In addition, Clemons paid dividends of

$40,000

.\ Clemmons's stock was trading at a price of

$295

per share on December

31,2024

.\ Required:\ a. Prepare the journal entries necessary to account for the Clemmons investment, assuming that Jungleland accounts for that investment as an equity-method investment.\ b. Prepare the journal entries necessary to account for the Blue investment, assuming that Jungleland uses the fair value through net income option.\ c. What amount will be reported for the investment, on Jungleland's balance sheet, under the equity method?\ d. What amount will be reported for the investment, on Jungleland's balance sheet, under the fair value through income statement option?

Transcribed Image Text:

Jungleland, Inc., acquired 1,000 of the 4,000 shares of Clemmons Corporation for $300 each on January 1, 2024. The book value of Jungleland's share of Clemmons's identifiable net assets was $275,000 on that date. $20,000 of the additional $25,000 paid by Jungleland was due to an asset with a 10-year estimated life and the remaining $5,000 was due to undervalued land held by Clemmons. Clemmons reported a net income of $100,000 on its 2024 GAAP income statement. In addition, Clemons paid dividends of $40,000. Clemmons's stock was trading at a price of $295 per share on December 31, 2024. Required: a. Prepare the journal entries necessary to account for the Clemmons investment, assuming that Jungleland accounts for that investment as an equity-method investment. + b. Prepare the journal entries necessary to account for the Blue investment, assuming that Jungleland uses the fair value through net income option. c. What amount will be reported for the investment, on Jungleland's balance sheet, under the equity method? d. What amount will be reported for the investment, on Jungleland's balance sheet, under the fair value through income statement option? Jungleland, Inc., acquired 1,000 of the 4,000 shares of Clemmons Corporation for $300 each on January 1, 2024. The book value of Jungleland's share of Clemmons's identifiable net assets was $275,000 on that date. $20,000 of the additional $25,000 paid by Jungleland was due to an asset with a 10-year estimated life and the remaining $5,000 was due to undervalued land held by Clemmons. Clemmons reported a net income of $100,000 on its 2024 GAAP income statement. In addition, Clemons paid dividends of $40,000. Clemmons's stock was trading at a price of $295 per share on December 31, 2024. Required: a. Prepare the journal entries necessary to account for the Clemmons investment, assuming that Jungleland accounts for that investment as an equity-method investment. + b. Prepare the journal entries necessary to account for the Blue investment, assuming that Jungleland uses the fair value through net income option. c. What amount will be reported for the investment, on Jungleland's balance sheet, under the equity method? d. What amount will be reported for the investment, on Jungleland's balance sheet, under the fair value through income statement option?

Answer rating: 100% (QA)

a Journal entries for the Clemmons investment under the equity method 1 On January 1 2024 when Jungl... View the full answer