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ABC Company acquired 20% (25,000 shares) of outstanding common stock of XYZ Company for $600,000 on January 1, 2022.

ABC Company acquired 20% (25,000 shares) of outstanding common stock of XYZ Company for $600,000 on January 1, 2022. XYZ Company declared and paid$.20 per share cash dividends on June 30 and on December 31, 2022. XYZ Company reported net income of $$300,000 for 2022. The Fair value of XYZ Company stock was$26 per share at December 31, 2022.

  1. Prepare journal entries for ABC Company for 2022, assuming that ABC can’t exercise significant influence over XYZ.
  2. Prepare journal entries for ABC Company for 2022, Assuming that ABC can exercise significant influence over XYZ.

 

Solutions

Expert Solution

Part 1) No significant influence:

Part 2) Significant Influence:

 

ekkarill92 answered 2 years ago
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