On August 1, 2023, Sandhill Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation for $1,220,000. At the time of purchase, WLT's net assets were undervalued by $70,000 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $300,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,342,000. On January 10, 2024, WLT paid a cash dividend. Sandhill's ownership entitles it to $15,000 of the dividend. Prepare the journal entries on the books of Sandhill Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Sandhill elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Aug. 1, 2023 FV-NI Investments Cash Dec. 31, 2023 FV-NI Investments Investment Income or Loss Jan. 10, 2024 ÷ Cash FV-NI Investments Debit 1220000 122000 15000 Credit 1220000 122000 15000
On August 1, 2023, Sandhill Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation for $1,220,000. At the time of purchase, WLT's net assets were undervalued by $70,000 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $300,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,342,000. On January 10, 2024, WLT paid a cash dividend. Sandhill's ownership entitles it to $15,000 of the dividend. Prepare the journal entries on the books of Sandhill Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Sandhill elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Aug. 1, 2023 FV-NI Investments Cash Dec. 31, 2023 FV-NI Investments Investment Income or Loss Jan. 10, 2024 ÷ Cash FV-NI Investments Debit 1220000 122000 15000 Credit 1220000 122000 15000
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
Related questions
Question
Transcribed Image Text:On August 1, 2023, Sandhill Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation
for $1,220,000. At the time of purchase, WLT's net assets were undervalued by $70,000 and had a remaining useful life of 12 years.
Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $300,000. Also, on December 31,
2023, the fair value of the investment in WLT shares was $1,342,000. On January 10, 2024, WLT paid a cash dividend. Sandhill's
ownership entitles it to $15,000 of the dividend.
Prepare the journal entries on the books of Sandhill Corporation to record the transactions described above, assuming that the 20%
interest in WLT does not represent significant influence, and that Sandhill elected to account for its investment following the fair value
through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the
account titles and enter O for the amounts. List all debit entries before credit entries.)
Date
Account Titles and Explanation
Aug. 1, 2023
FV-NI Investments
Cash
Dec. 31, 2023
FV-NI Investments
Investment Income or Loss
Jan. 10, 2024 ÷
Cash
FV-NI Investments
Debit
1220000
122000
15000
Credit
1220000
122000
15000
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning