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Prepare dated journal entries for the investment

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Question - For each of the following scenarios, prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes.

On March 1, 20X0, JBJ Co. acquired 1,000 shares of Hoi Co. for $40,000. This investment represents a 15% interest in Hoi. JBJ has classified this investment as an FVTOCI. On November 30, 20X0, Hoi paid a $35,000 dividend to its shareholders. At February 28, 20X1, Hoi's shares were valued at $40/share, and Hoi reported net income of $150,000 for the year. On April 15, 20X1, JBJ sold the shares for $75,000. Both JBJ and Hoi have February 28th year-ends.

On March 1, 20X0, Merk Ltd. acquired 2,000 shares of Hoi Co. for $70,000. This investment represents a 30% interest in Hoi. Merk has significant influence. On November 30, 20X0, Hoi paid a $35,000 dividend to its shareholders. At December 31, 20X0, Hoi's shares were valued at $40/share, and Hoi reported net income of $150,000 for the year. On April 15, 20X1, Merk sold the shares for $116,000. Both Merk and Hoi have February 28th year-ends.

Reference no: EM133029599

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