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Record the initial purchase of the Oregano inc shares

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Question - On January 2, 2017, Basil Corp invested $4,150,000 in Oregano Inc for 40% of its outstanding common shares. At this time, the book value (equity) of Oregano was $8,4000,000. Oregano pays out 25% of its net income in dividends each year. Basil elects two of five members of Oregano's board of directions. During 2017, Basil received a cash dividend of $250,000from Oregano.

Required -

Record the initial purchase of the Oregano inc shares by Basil Corp.

Calculate Oregano Inc's net income for 2017.

Record the 2017 journal entries related to this investment on Basil's books.

Reference no: EM132524153

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