AE17-12 Equity Method vs. Fair Value Method
Show the journal entries for each date in 2012:
March 18: Hatcher Cosmetics acquired 10% of the 218,100 shares of common stock of Ramirez Fashion at a total cost of $15 per share.
June 30: Ramirez declared and paid a $81,500 cash dividend.
Dec 31: Ramirez reported net income of $126,100 for the year.
At year end, the market price of Ramirez Fashion was $17 per share and these should be classified as available-for-sale.
Jan 1: Holmes, Inc. bought 25% of Nadal Corp's 33,400 outstanding shares of common stock at a total cost of $12 per share (significant influence).
June 15: Nadal declared and paid a dividend of $37,700.
Dec 31: Nadal reported a net income of $91,200.
Your tutorial gives instructional notes and the journal entries needed. Click in cells to see computations.