Equity Method - Journal entries for Holding Company
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Sims Company owns 80% of the common stock of Allied Company. In 2006, Allied reported $200,00 net income and paid cash dividends of $80,000. In 2007, Allied reported a $40,000 net loss and paid $10,000 of dividends.
What are the above journal entries for the above on Sims' books assuming use of the equity method of accounting for the investment in the subsidiary?
Sims 80%
2006
Jan 1 Cash 64,000
Revenue 64,000
From cash dividends
2007
Jan 1 Unrealized loss on Trading 32,000
Trading Securities 32,000
Jan 1 Cash 8,000
Revenue 8,000
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Solution Summary
The solution provides Equity method Journal entries for Sims 80% ownership of Allied Company.
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Journal Entries - will be recorded on last of day closing of accounting year.
2006
1. ...
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