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On January 3, 2015, McDonald Inc. purchased 40% of the outstanding common stock of Old Farms...

On January 3, 2015, McDonald Inc. purchased 40% of the outstanding common stock of Old Farms Co., paying $128,000 when the book value of the net assets of Old Farms equaled $250,000 . The difference was attributed to equipment, which had a book value of $60,000 and a fair value of $100,000, and to buildings, with a book value of $50,000 and a fair value of $80,000. The remaining useful life of the equipment and buildings was 4 years and 12 years , respectively. During 2015, Old Farms reported net income of $80,000 and paid dividends of $50,000.

Prepare the journal entries made by McDonald Inc. during 2015 related to its investment in Old Farms
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Page No. Date for McDonald Inel 2015 Jan. 3 Journal Entry - Particulars Investment in old farm - To Bank Being investment madNotes:

1. 40% investment in old farms co. creates as investment in asscociates in the books of Mcdonalds Inc. and change in fair values to be reported in the books of Old farms co.

2. Dividend paid by Old Farms Co $50,000 then share received shall be debited to bank and reduces the balance of Investment in Old Farms Co..

3. Share of profit in old farm increases the balance in Investment in Old Farms Co.

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