Problem 2-1
Part A
Investment Account
January 1, Year 5
$650,000
Plus:
Carter’s Year 5 profit
Anderson’s percentage ownership
$95,000
20%
19,000
Less:
Dividends
$60,000
20%
December 31, Year 5
(12,000)
657,000
Plus:
Carter’s Year 6 profit
Anderson’s percentage ownership
$105,000
20%
21,000
Less:
Dividends
$60,000
20%
December 31, Year 6
(12,000)
$666,000
Part B
(a)
Investment in Carter
Unrealized gain on FVTPL investment
(20,000 shares x 35 – 666,000)
34,000
34,000
(b)
Cash (50,000 x 20%)
10,000
Dividend income
10,000
Record dividend revenue for Anderson’s share of dividends declared and paid by Carter
Cash (20,000 shares x 37)
Investment in Carter
Gain on sale
Sale of investment in Carter
740,000
700,000
40,000