Prepare journal entries on books of metlock corporation

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Question - On January 1, 2017, Metlock Corporation purchased 18% of the outstanding voting shares in WLT Corporation for $1,240,000. At the time of purchase, WLT's net assets were undervalued by $97,600 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2017, WLT reported a net income of $336,000. Also on December 31, 2017, the fair value of the investment in WLT shares was $1,364,000. On January 10, 2018, WLT paid a cash dividend. Metlock's ownership entitles it to $35,460 of the dividend.

Prepare the journal entries on the books of Metlock Corporation to record the transactions described above, assuming that the 18% interest in WLT does represent significant influence.

Reference no: EM131939232

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