JLB Enterprises acquired 15% of REB Corporation on January 1, 2020, for $63,000 when the...
80.2K
Verified Solution
Link Copied!
Question
Accounting
JLB Enterprises acquired 15% of REB Corporation on January 1, 2020, for $63,000 when the book value of REBs net assets was $360,000. During 2020, REB reported net income of $90,000 and paid dividends of $30,000. On January 1, 2021, JLB purchased an additional 25% of REB for $240,000. Any excess of cost over book value was attributable to goodwill (No amortization). On that same date, JLB changed to the equity method. During 2021, REB reported net income of $120,000 and paid dividends of $45,000.
a. What investment income did JLB record from REB in 2020?
b. What investment income did JLB record from REB in 2021?
c. What journal entry was made on Jan 1 2021 as switch equity method?
d. What was the balance in Equity Investment at December 31, 2021? (Hint: use the amount paid for 25% of REB from JLB to calculate the implied fair value of the original 15% of the investment)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
