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Prepare the journal entries that mojito would make

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Question - On January 1, 2021, Mojito Corporation purchased 25% (20,000 shares) of the outstanding stock of Dulcinea Corporation for $145,000. During 2021, Dulcinea Corporation paid total dividends of $55,000 and earned $85,000 in net income. At the end of 2021, Dulcinea Corporation's stock had a fair market value of $160,000.

Required -

a. Prepare the journal entries that Mojito would make during 2021 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (ie. fair value method).

b. Prepare the journal entries that Mojito would make during 2021 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method).

Reference no: EM133173535

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