Accounting for equity investments On January 1, 2018, Staub, Inc. decides to invest in 7,000 shares of Chestnut stock when the stock is selling for $10 per share. On June 1, 2018, Chestnut paid a...


Accounting for equity investments


On January 1, 2018, Staub, Inc. decides to invest in 7,000 shares of Chestnut stock when the stock is selling for $10 per share. On June 1, 2018, Chestnut paid a $0.90 per share cash dividend to stockholders. On December 31, 2018, Chestnut reports net income of $70,000 for 2018. Assume Farrier has 28,000 shares of voting stock outstanding during 2018 and Staub has significant influence over Chestnut.


Requirements


1. Identify what type of investment the Chestnut stock is for Staub.


 2. Journalize the transactions related to Staub’s investment in the Chestnut stock during 2018.


3. In what category and at what value would Staub’s report the investment on the December 31, 2018 balance sheet?



Dec 12, 2021
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