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Rina8888 [55]
3 years ago
8

Listed below are a few events and transactions of Kodax Company.

Business
1 answer:
Arada [10]3 years ago
3 0

Answer:

Jan. 2

Investment in Associate $526,000 (debit)

Cash $526,000 (credit)

Sept. 1

Cash $138,000 (debit)

Dividend Received $138,000 (credit)

June 1

Cash $349,600 (debit)

Dividend Received $349,600 (credit)

Dec. 31

Cash $96,500 (debit)

Investment in Associate $96,500 (credit)

Explanation:

When Kodax Company purchased  92,000 shares of Grecco Co she had significant influence (more than 20% of shareholding in Grecco Co). We call this an <em>Investment in an Associate</em>.

The Investment in Associate is a <em>Financial Asset </em>to the Holder (Kodax Company) and an <em>Equity Element</em> to the Investee (Grecco Co) and should be recorded appropriately as above.

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