Chapter 15 – Investments and International Operations
Solution: Alternate Demonstration Problem
Chapter 15
Part 1
2015
Jan 1 Long-Term Investment–Investee Stock... 150,000
Cash…………………………………………….… 150,000
Long-Term Investment–Investee Stock 8,000
Dec 31 Long-Term Investment–Investee Stock... 16,000
Earnings from Long-Term Investment
–Investee Company…………………….………. 16,000
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Chapter 15 – Investments and International Operations
Solution: Alternate Demonstration Problem
Chapter 15
Part 2
2015
2016
Oct 1 Cash………………………………………………….… 8,000
Dividends Earned…………….…….………. 8,000
Dec 31 No entry
2017
Note that the total income statement effect is the same under both
methods:
Part 1: $20,000 earnings in 2013
16,000 earnings in 2014
12,000 gain on sale in 2015
$48,000
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