Oliver Corporation has owned stock of Conrad Corporation since 2009. At December 31, 2012, its balances related to this investment were:
|
Equity Investments |
$185,000 |
|
Fair Value Adjustment (AFS) |
34,000 Dr. |
|
Unrealized Holding Gain or Loss—Equity |
34,000 Cr. |
On January 1, 2013, Oliver purchased additional stock of Conrad Company for $475,000 and now has significant influence over Conrad. If the equity method had been used in 2009–2012, Oliver’s share of income would have been $33,000 greater than dividends received. Prepare Oliver’s journal entries to record the purchase of the investment and the change to the equity method.