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Question No. 3 (5 Marks): Alpha Company purchases 20 percent of Beta Company for $250,000...

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Accounting

Question No. 3 (5 Marks):

Alpha Company purchases 20 percent of Beta Company for $250,000 in cash. Alpha can exercise significant influence over the investee; thus, the equity method is appropriately applied. The acquisition is made on January 1, 2018. During 2018, Beta reports a net income of $187,500 and at year-end declares and pays a cash dividend of $75,000. Amortization associated with the purchase of this investment is $8,000 per year.

Required:

Prepare the journal entries for 2018 in the records of Alpha Company

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