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Prepare the equity method journal entries for the year

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Reference no: EM132791621

Question - Orcullo Ltd. had the following investment portfolio at January 1, 2020: Investment

Quantity Cost per Share Fair Value at Dec. 31, 2019

Li Corp. 900 $15.00 $12.50

Liang Corp. 800 20.00 17.50

Lin Corp. 600 9.00 8.20

During 2020, the following transactions took place:

1. On March 1, Liang Corp. paid a $2 per share dividend.

2. On April 30, Orcullo sold 300 shares of Lin Corp. for $10 per share.

3. On May 15, Orcullo purchased 200 more Li Corp. shares at $16 per share.

4. At December 31, 2020, the shares had the following market prices per share: Li Corp. $17; Liang Corp. $19; and Lin Corp. $8.

Required -

a. Assuming that Orcullo Ltd. is a publicly accountable enterprise that accounts for its investment portfolio at FV-OCI (with no recycling to net income), prepare journal entries to record all of the 2020 transactions and year-end events.

b. Assume that only Liang Corp is held under the equity method with no yearend revaluation and 2020 Net income (EPS) is $5 per share. Prepare the equity method journal entries for the year for Liang Corp.

Reference no: EM132791621

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