Jackson industry''s net income for the year

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Reference no: EM13954846

On January 2, 2016, Sanborn Tobacco Inc. bought 10% of Jackson Industry's capital stock for $104 million as a temporary investment. Sanborn classified the securities acquired as available-for-sale. Jackson Industry's net income for the year ended December 31, 2016, was $134 million. The fair value of the shares held by Sanborn was $126 million at December 31, 2016. During 2016, Jackson declared a dividend of $74 million.

Required:

1.Prepare all appropriate journal entries related to the investment during 2016.

2. Indicate the effect of this investment on 2016 income before taxes.

(Enter your answer in millions rounded to 1 decimal place.

Reference no: EM13954846

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