Eali company acquires 15% of Golden Corporation on January 1, 2015. On January 1

Question

Eali company acquires 15% of Golden Corporation on January 1, 2015. On January 1, 2016, Eali purchased an additional 25% of Golden The ownership allows Eali have significant influence over Golden. During 2016, Golden reported net income of $150,000.00 and paid dividends of $50.000.00

Which of the choices below will be a Journal entry oon December 31 2016?

A: No entries are required

B: Debit to the investment income account equal to the investors share of investee's income less dividends

C: Debit to retained earnings account equal to the investor's share of investee's income less dividends

D: Credit to the investment account equal to the investor's share of investee's income less dividends.

Explanation / Answer

Company should do at the end of period investment debit equal to investor's sahre and less dividend equalt to investor's share.

so answer is b) Debit to the investment income account equal to the investors share of investee's income less dividends

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