Assume B (the investee) has the following simplified balance sheet : Assets $100,000 Liabilities $60,000 Equity...
Assume B (the investee) has the following simplified balance sheet :
Assets $100,000
Liabilities $60,000
Equity $40,000
Prepare journal entries for the INVESTOR (A) for the following events :
a) A (the investor) pays $10,000 for a 25% interest in B. A has significant influence.
b) In the first year after the investment, the investee earns $20,000
c) At the end of the first year, B pays total dividends of $8,000 to its shareholders
d) At the end of the first year, A sells 30% of its investments for $9,000
e) Instead of (d), A decides to keep its investment. In Year 2, B has a loss of $100,000
If you could explain in full for each part that would be great, Thanks!
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