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Relish Company purchased 15% of Squall Company on January 1, 2021 for $300,000. At the...

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Accounting

Relish Company purchased 15% of Squall Company on January 1, 2021 for $300,000. At the time, there was no
significant influence and the securities were short term investments. Squall had earnings in 2021 of
$250,000 and paid dividends of $60,000. At December 31, 2021 the value of Relish's interest in Squall had
risen to $325,000.

Using the market value method, record the activity for 2021 on the books of Relish.

Relish Company purchased 15% of Squall Company on January 1, 2021 for $300,000. At the time, there was no
significant influence and the securities were short term investments. Squall had earnings in 2021 of
$250,000 and paid dividends of $60,000. At December 31, 2021 the value of Relish's interest in Squall had
risen to $325,000.
Using the market value method, record the activity for 2021 on the books of Relish.

B.

Assuming the $300,000 purchase above represented 25% interest in Squall, use the equity method to
record the activity for 2021 on the books of Relish.

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