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What method should be used to account for this investment

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Reference no: EM133005720

Question - Sheen Company acquired 60% of the stock Suzy Minerals Company. Sheen acquired this investment for purposes of being able to exert significant influence over the strategic plans and operations of Suzy. Following are the events pertaining to this investment:

Sept 1 Purchased 300,000 shares of Suzy for P 34 per share.

Sept 30 The fair value of Suzy's stock for P 54 per share and the company reported September income of P 660,000.

Oct 15 The fair value of Suzy's stock was P 64 per share, and the company declared and paid a dividend of P 2.5 per share.

Oct 31 The fair value of Suzy's stock was P 56 per share, and the company reported October income of P 540,000.

Required -

1. What method should be used to account for this investment?

2. Make journal entries to account for the activity pertaining to the investment in Suzy Minerals.

3. If the investment in Suzy Minerals was insufficient to allow Sheen to exert significant influence, how much would the accounting approach differ?

Reference no: EM133005720

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