Ravine Corporation purchased 30 percent ownership of Valley Industries for $90,0
ID: 2474914 • Letter: R
Question
Ravine Corporation purchased 30 percent ownership of Valley Industries for $90,000 on January 1, 20X6, when Valley had capital stock of $240,000 and retained earnings of $60,000. The following data were reported by the companies for the years 20X6 through 20X9:
What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment using the cost method and the equity method?
Give all appropriate journal entries for 20X8 that Ravine made under the cost method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Ravine Corporation purchased 30 percent ownership of Valley Industries for $90,000 on January 1, 20X6, when Valley had capital stock of $240,000 and retained earnings of $60,000. The following data were reported by the companies for the years 20X6 through 20X9:
Explanation / Answer
1.
Equity Method
Cost Method
Dividne paid from undistributed earnigng of prior eats
(30,000+50,000-20,000-40,000=20,000 and 10,0000 earnings of current year
20X6 140,000 + 0.3 * 30,000 149000 20X7 80,000 + 0.3 * 50,000 95000 20X8 220,000 + 0.3 * 10,000 223000 20X9 160,000 + 0.3 * 40,000 172000Related Questions
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