Record the entries that allen corporation had influence

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On January 1, 2020, Allen Corporation purchased 30% of the 24,000 outstanding common shares of Towne Corporation at $15 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $19,200. Towne Corporation declared and paid cash dividends of $6,400 on December 30, 2020, to shareholders on record. As of December 31, 2020, common shares of Towne Corporation were trading at $20 per share.

Problem a. Record the entries in 2020 assuming that Allen Corporation had significant influence over Towne Corporation.

Reference no: EM132764550

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