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Fair value and equity methods. Prepare journal entries for the following transactions, assuming ABC uses (a)...

Fair value and equity methods. Prepare journal entries for the following transactions, assuming ABC uses (a) the fair value method and (b) the equity method for accounting for its investments in XYZ Co. a. At the beginning of Year 2014, ABC bought 20% of XYZ's common stock at its book value. Total book value of all XYZ's common stock was $800,000 on this date. b. During Year 2014, XYZ reported $60,000 of net income and paid $30,000 of dividends. c. During Year 2015, XYZ reported a net loss of $10,000 and paid $5,000 of dividends.

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Expert Solution

Above figures have been calculated in the following manner:


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