On January 6, 2016, Bulldog Co. purchased 26% of the outstanding stock of Gator Co....
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Accounting
On January 6, 2016, Bulldog Co. purchased 26% of the outstanding stock of Gator Co. for $192,100. Gator Co. paid total dividends of $24,500 to all shareholders on June 30. Gator had a net loss of $54,000 for 2016.
Required:
A.
Journalize Bulldogs purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Refer to the Chart of Accounts for exact wording of account titles.
B.
Compute the balance of Investment in Gator Co. Stock on December 31, 2016.
C.
How does valuing an investment under the equity method differ from valuing an investment at fair value?
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