Turner Company purchased 40% of the outstanding stock of ICA Company for $10,000

Question

Turner Company purchased 40% of the outstanding stock of ICA Company for $10,000,000 on January 2, 2018, Turner elects the fair value option to account for the investment. During 2018, ICA earns $750,000 of income and on December 30 pays a dividend of $500,000. On December 31, 2018, the fair value of Turner's investment has increased to $11,500,000 Prepare the journal entries in the books of Turner to account for this investment during 2018. Assume that Turner will account for the investment for a trading security.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the investment. Note: Enter debits before credits. Date General Journal Debit Credit January 02, 2018 Record entry Clear entry View general journal

Explanation / Answer

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Jan 2 Investment in ICA 10000000 Cash 10000000 (to record purchase of investment) Dec 30 Cash 200000 Investment Revenue 200000 (to record receipt of dividend) Dec 31 Fair Value Adjustment 1500000 Net unrealized holding gain/loss 1500000 (to record adjusment of trading sec to FMV)

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