Pager Corporation acquires 30% of the outstanding voting common shares of the Intercomm Corporation for $600,000 . Pager Corporation acquires the investment in Intercomm Corporation by buying previously issued shares of Intercomm Corporation from other investors. Suppose that Intercomm Corporation reports earnings of $100,000 and pays dividends of $40,000, during the next accounting period. As a
result, Pager Corporation's entries are:
a. Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Investment in Stock of Intercomm Corporation . . . . . . . . . . . . . . . . . .30,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . .. . . . . 12,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
b. Investment in Stock of Intercomm Corporation . . . . . . . . . . . . . . . 30,000
Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . . . . . . . . . . 12,000
c. Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . .100,000
Investment in Stock of Intercomm Corporation . . . . . . . . . . . . . . . . . 100,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . . . . . . . . . . 12,000
d. Investment in Stock of Intercomm Corporation . . . . . . . . . . . . . . . 100,000
Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . . . . . . . . . . 12,000
e. Investment in Stock of Intercomm Corporation . . . . . . . . . . . . . . . 30,000
Investment Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . . . . . . . . . . 12,000
B
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