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3 years ago

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 Investment in an Associate.

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

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