Codd Company acquired 70 percent of the outstanding voting common stock of Snow Company for USD 8,568,000 on 2010 January 1. The investment is accounted for under the equity method. During the years 2010-2012, Snow Company reported the following:
|
Net Income(loss) |
DividendsPaid |
|
|
2007 |
$1,454,880 |
$871,920 |
|
2008 |
372,960 |
223,440 |
|
2009 |
-23,520 |
55,860 |
a. Prepare general journal entries to record the investment and the effect of the subsidiary”s income, losses, and dividends on Codd Company”s accounts.
b. Compute the investment account balance on 2011 December 31.