Question No. 3 :
Alpha Company purchases 20 percent of Beta Company for $250,000
in cash. Alpha can exercise significant influence over the
investee; thus, the equity method is appropriately applied. The
acquisition is made on January 1, 2018. During 2018, Beta reports a
net income of $187,500 and at year-end declares and pays a cash
dividend of $75,000. Amortization associated with the purchase of
this investment is $8,000 per year.
Required:
Prepare the journal entries for 2018 in the...