Question

Ivanhoe Company acquired 30% of the outstanding common stock of Grindelwald Inc. on January 1, 2022, by paying $1,170,000 for 39,000 shares. Grindelwald declared and paid a $1 per share cash dividend on June 30 and again on December 31, 2022. Grinwold reported net income of $520,000 for the year.(a)Prepare the journal entries for Sunland Company for 2022, assuming Sunland cannot exercise significant influence over Grinwold

Answer 1

December 31, 2022

Dr Available-for-Sale Securitie$1,170,000

Cr Cash.............................................................$1,170,000

June 30, 2022

Dr Cash ................................................................$39,000

Cr Dividend Revenue ......................................

$39,000

December 31, 2022

Dr Cash ............................................................$39,000

Cr Dividend Revenue..................................$39,000

Dr Securities Fair Value Adjustment(Available-for-Sale) ........................................$273,000

Cr Unrealized Holding Gain or Loss—Equity ......................................................$273,000

Step-by-step explanation:

Journal entries for Sunland Company for 2022

December 31, 2022

Dr Available-for-Sale Securitie$1,170,000

Cr Cash.............................................................$1,170,000

June 30, 2022

Dr Cash ................................................................$39,000

($39,000×$1 per share)

Cr Dividend Revenue ......................................

$39,000

December 31, 2022

Dr Cash ............................................................$39,000

Cr Dividend Revenue..................................$39,000

Securities Fair Value Adjustment

Dr (Available-for-Sale) ...........................$273,000

Unrealized Holding Gain or Loss

Cr Equity ........................................$273,000

$37 X 39,000 = $1,443,000

$1,443,000 – $1,170,000 = $273,000