Retroactive Recognition
Idle Corporation has been acquiring shares of Fast Track Enterprises at book value for the last several years. Data provided by Fast Track included the following:
| 20X2 | 20X3 | 20X4 | 20X5 |
Net Income | $40,000 | $60,000 | $40,000 | $50,000 |
Dividends | 20,000 | 20,000 | 10,000 | 20,000 |
Fast Track declares and pays its annual dividend on November 15 each year. Its net book value on January 1, 20X2, was $250,000. Idle purchased shares of Fast Track on three occasions:
Date | Percent of Ownership Purchased | Amount Paid |
|
|
|
January 1, 20X2 | 10% | $25,000 |
July 1, 20X3 | 5 | 15,000 |
January 1, 20X5 | 10 | 34,000 |
Required
Give the journal entries to be recorded on Idle’s books in 20X5 related to its investment in Fast Track.
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