Problem

Fair Value RecognitionKent Company purchased 35 percent ownership of Lomm Company on Janua...

Fair Value Recognition

Kent Company purchased 35 percent ownership of Lomm Company on January 1, 20X8, for $140,000. Lomm reported 20X8 net income of $80,000 and paid dividends of $20,000. At December 31, 20X8, Kent determined the fair value of its investment in Lomm to be $174,000.

Required

Give all journal entries recorded by Kent with respect to its investment in Lomm in 20X8 assum­ing it uses

a. The equity method.


b. The fair value method.

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