Question

Metlock Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,310,000 for 52,400 shares. Kulikowski Inc. declared and paid an $0.75 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $667,000 for 2021. The fair value of Kulikowski’s stock was $28 per share at December 31, 2021. Assume that the security is a trading security.

Prepare the journal entries for Metlock Inc. for 2020 and 2021, assuming that Metlock cannot exercise significant influence over Kulikowski.

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020June 30, 2021Dec. 31, 2021
Dec. 31, 2020June 30, 2021Dec. 31, 2021
Dec. 31, 2020June 30, 2021Dec. 31, 2021
	(To record dividend.)
	(To record fair value.)

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List of Accounts

  

  

Prepare the journal entries for Metlock Inc. for 2020 and 2021, assuming that Metlock can exercise significant influence over Kulikowski.

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020June 30, 2021Dec. 31, 2021
Dec. 31, 2020June 30, 2021Dec. 31, 2021
Dec. 31, 2020June 30, 2021Dec. 31, 2021
	(To record dividend.)
	(To record revenue.)

  

  

At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the total net income reported in 2021 under each of these methods?

		Fair Value Method		Equity Method
Investment amount (balance sheet)		$		$
Dividend revenue (income statement)
Unrealized holding gain (income statement)
Investment income (income statement)

Answer 1

investment value is the amount of money and investor cld pay for her property. it refers to an assests specific value based on certain paramters it is an individuals measurement of the assets property value.