Fill in the dollar changes caused in the investment account and dividend revenue

Question

Fill in the dollar changes caused in the investment account and dividend revenue or investment revenue account by each of the following transactions. using A.fair value method and B.equity method. question 1.At the beginning of year 1, Crane bought 40% of Hudson's common stock at its book value. Total book value of all Hudsons common stock was $800,000 on this date. So need F.V. method Investment account and F.V. Dividend Revenue and then Equity Method Investment Account and Equity Method Investment Revenue. Please Help!

Explanation / Answer

, Crane bought 40% of Hudson's common stock at its book value. Total book value of all Hudson's common stock was $800,000 on this date. 2. During Year 1, Hudson reported $60,000 of net income and paid $30,000 of dividends. 3. During Year 2, Hudson reported $30,000 of net income and paid $40,000 of dividends. 4. During Year 3, Hudson reported a net loss of $10,000 and paid $5,000 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue. Solution 17-125 Transaction (a) Fair Value Method (b) Equity Method Investment Dividend Investment Investment Account Revenue Account Revenue 1. 320,000 320,000 2. 12,000 24,000 (12,000) 24,000 3. 16,000 12,000 (16,000) 12,000 4. 2,000 (4,000) (2,000) (4,000) 5. 320,000 30,000 322,000 32,000

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