Your answer is partially correct. Try again. Splish Corporation has owned stock

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Your answer is partially correct. Try again. Splish Corporation has owned stock of Conrad Corporation since 2014. At December 31, 2017, its balances related to this investment were: Equity Investments Fair Value Adjustment (AFS) Accumulated Unrealized Holding Gain or Loss-Income (recorded in Retained Earnings) 35,000 Cr $201,000 35,000 Dr. On January 1, 2018, Splish purchased additional stock of Conrad Company for $445,000 and now has significant influence over Conrad. If the equity method had been used in 2014-2017, Splish's share of income would have been $34,000 greater than dividends received Prepare Splish's journal entries to record the purchase of the investment and the change to the equity method. (Credit account tities are automatically Indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit quity Investments Method ?. ined Earnin To record the purchase of additional stock.,) uity Investments Method ?. quity Investments (Available-for-Sale) (To reclassify current investment.) Unrealized Holding Gain or Loss- Equity air Value Adjustmen (To eliminate accounts for change to equity method.)

Explanation / Answer

1) Equity Investment(Equity Method) 479000

Cash 445000

Retained Earnings 34000

( to record purchase of additional stock)

2) Equity Investment (Equity Method) 201000

Equity Investment(Available for sale) 201000

( to reclassify current investment)

3) Unrealised Holding Gain-Equity 35000

Fair Value Adjustment 35000

( to elimiate accounts for change to equity method)

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