Pls Help ASAP (thank you in advance) Felicia Company acquired 20,000 of the 80,0
ID: 2500893 • Letter: P
Question
Pls Help ASAP (thank you in advance)
Felicia Company acquired 20,000 of the 80,000 shares of outstanding common stock of Nueces Corporation as a long-term investment. The annual accounting period for both companies ends December 31. The following transactions occurred during the year:
Felicia Company acquired 20,000 of the 80,000 shares of outstanding common stock of Nueces Corporation as a long-term investment. The annual accounting period for both companies ends December 31. The following transactions occurred during the year:
Felicia Company acquired 20,000 of the 80,000 shares of outstanding common stock of Nueces Corporation as a long-term Investment. The annual accounting perlod for both companles ends December 31. The following transactions occurred during the year Jan. 10 Purchased 20,000 shares of Nueces common stock at $16 per share. Dec. 31 Nueces Corporation reported net income of $97,000. Dec. 31 Nueces Corporation declared and pald a cash dividend of $0.50 per share. Dec. 31 Determined the falr value of Nueces stock to be $15 per share.Explanation / Answer
% of holdig= 20000 / 80000 = .25 or 25%
Date Title Debit credit jan 10 Investment in nueces 320,000 cash (20000* 16) 320,000 [being investment made] dec 31 Investment 24250 Investment income (97000*.25) 24250 [being share in income recorde] dec 31 cash 10000 Investment (.5*20000) 10000 [being dividend received] dec 31 No entry is required under equity method for increase in fair value as long term investment is recorded at cost