The Crump Companies, Inc., has ownership interests in several public companies.

Question

The Crump Companies, Inc., has ownership interests in several public companies. At the beginning of 2018, the company's ownership interest in the common stock of Silken Properties increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $31 million at the time of the change. Accountants working with company records determined that the balance would have been $48 million if the account had been adjusted to reflect the equity method Required: 1. Prepare the journal entry to record the change in accounting principle. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Explanation / Answer

1.

General Journal Debit Credit Investment in equity securities($48 million – $31 million) $17 Retained earnings $17

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