Selk Steel Co., whichbegan operations on January 4, 2017, had the following subsequenttransactions and events in its long-term investments.
2017
| Jan. | | 5 | | Selk purchased60,000 shares (20% of total) of Kildaire's common stock for$1,560,000. |
| Oct. | | 23 | | Kildaire declaredand paid a cash dividend of $3.20 per share. |
| Dec. | | 31 | | Kildaire’s netincome for 2017 is $1,164,000, and the fair value of its stock atDecember 31 is $30.00 per share. |
2018
| Oct. | | 15 | | Kildaire declaredand paid a cash dividend of $2.60 per share. |
| Dec. | | 31 | | Kildaire’s netincome for 2018 is $1,476,000, and the fair value of its stock atDecember 31 is $32.00 per share. |
2019
| Jan. | | 2 | | Selk sold all ofits investment in Kildaire for $1,894,000 cash. |
Problem 15-4A Part 2
Part 2
Assume that although Selk owns 20% of Kildaire’s outstanding stock,circumstances indicate that it does not have a significantinfluence over the investee and that it is classified as anavailable-for-sale security investment.
Required:
1. Prepare journal entries to record the precedingtransactions and events for Selk. Also prepare an entry datedJanuary 2, 2019, to remove any balance related to the fair valueadjustment. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)
