(Learning Objective 1, 2: Accounting for available for sale and equity method investments) The beginning balance sheet of Dealmaker Securities included the following:
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Long Term Investments in Affiliates (equity method investments) |
$409,000 |
Dealmaker completed the following investment transactions during the year:
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Feb. 16 |
Purchased 10,000 shares of BCM Software common stock as a long term available for sale investment, paying $9.25 per share. |
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May 14 |
Received cash dividend of $0.82 per share on the BCM investment. |
|
Oct. 15 |
Received cash dividend of $29,000 from an affiliated company. |
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Dec. 31 |
Received annual reports from affiliated companies. Their total net income for the year was $620,000. Of this amount, Dealmaker’s proportion is 25%. |
The market values of Dealmaker’s investments are BCM, $89,000; affiliated companies, $947,000.
Required
1. Record the transactions in the journal of Dealmaker Securities.
2. Post entries to the Long Term Investments in Affiliates T account and determine its balance at December 31.
3. Show how to report Long Term Available for Sale Investments and Long Term Investments in Affiliates on Dealmaker’s balance sheet at December 31.