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22 November, 08:51

Ivanhoe Company acquired 30% of the outstanding common stock of Grindelwald Inc. on January 1, 2022, by paying $1,170,000 for 39,000 shares. Grindelwald declared and paid a $1 per share cash dividend on June 30 and again on December 31, 2022. Grinwold reported net income of $520,000 for the year. (a) Prepare the journal entries for Sunland Company for 2022, assuming Sunland cannot exercise significant influence over Grinwold

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  1. 22 November, 09:16
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    December 31, 2022

    Dr Available-for-Sale Securitie$1,170,000

    Cr Cash ... $1,170,000

    June 30, 2022

    Dr Cash ... $39,000

    Cr Dividend Revenue ...

    $39,000

    December 31, 2022

    Dr Cash ... $39,000

    Cr Dividend Revenue ... $39,000

    Dr Securities Fair Value Adjustment (Available-for-Sale) ... $273,000

    Cr Unrealized Holding Gain or Loss-Equity ... $273,000

    Explanation:

    Journal entries for Sunland Company for 2022

    December 31, 2022

    Dr Available-for-Sale Securitie$1,170,000

    Cr Cash ... $1,170,000

    June 30, 2022

    Dr Cash ... $39,000

    ($39,000*$1 per share)

    Cr Dividend Revenue ...

    $39,000

    December 31, 2022

    Dr Cash ... $39,000

    Cr Dividend Revenue ... $39,000

    Securities Fair Value Adjustment

    Dr (Available-for-Sale) ... $273,000

    Unrealized Holding Gain or Loss

    Cr Equity ... $273,000

    $37 X 39,000 = $1,443,000

    $1,443,000 - $1,170,000 = $273,000
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