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Accounting For Results Under The Equity Method

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On January 1, 20xx, Orchid Corporation acquired 40 percent of the voting stock of Vose Corporation, an amount sufficient to exercise significant influence over Vose Corporation's activities, for $4,800,000 in cash. On December 31, Orchid determined that Vose paid dividends of $800,000 but incurred a net loss of $400,000 for 20xx. Prepare entries in T account form to reflect this information.

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Using an Excel spreadsheet, this solution illustrates how to record the dividends and net loss of an investee on the investor's books using the equity method.

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These entries are made under the Equity Method of accounting. Under this ...

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