Question

Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,168,400 for 50,800 shares. Kulikowski Inc. declared and paid an $0.75 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $663,000 for 2021. The fair value of Kulikowski’s stock was $26 per share at December 31, 2021. Assume that the security is a trading security.

(a) Your answer is partially correct. Try again. Prepare the journal entries for Bramble Inc. for 2020 and 2021, assuming that Bramble cannot exercise significant influence over Kulikowski

Answer 1

Dec 31, 2020	Equity Investments	1,168,400
	Cash		1,168,400
June 30	Cash	38,100
	Dividend revenue		38,100
	(50,800*0.75)
Dec 31	Cash	38,100
	Dividend revenue		38,100
	Fair value adjustment	152,400
	Unrealized holding gain or loss - Income statement		152,400
	(50,800*26)-1,168,400