accounting-On January 1, 2011, the Travis Corporation purchased a 22% interest
1, 2011, the Travis Corporation purchased a 22% interest in Scott Company by
procuring 5,000 shares of the 25,000 outstanding shares of common stock.
acquisition price was $32.50 a share. On the date of this procurement, Scott
Companyâs net assets were defined as the following:
liabilities has a book and fair value of $90,000
Scott Company had earned income of $76,000 and paid dividends of
depreciated items have a useful life of 5 years remaining and no residual
Prepare all the necessary journal entries on Travisâs books to
record the acquisition and the events subsequent to the initial investments.
Entries by Travis
Fair Value Method
On January 2, 2011 Travis Corporation purchased
5000 shares (?? of Scott Company) at a cost of ???? a share
For the year 2011, Scott Company reported net
income of ????, Travis Corp’s share is ????
Revenue from Investment
Company paid a cash divident of ????; Travis Corp received ????
Company owns stock in several like companies. Investments in some of these
affiliates are accounted for as securities available for sale while some are
accounted for using the equity method.
information in Problem 2 and answer the following:
factors determine which method should be used?
events are recorded when the equity method is used?
events are recorded when the securities are accounted for as available for
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