Question
On January 1, 2021, Whispering Winds's Motor Corp., a private company, buys 30% of Molly's Engines...
On January 1, 2021, Whispering Winds's Motor Corp., a private company, buys 30% of Molly's Engines Ltd.'s 440,000 common shares for $1,232,000. On December 31, 2021, Molly's pays a $48,000 cash dividend and reports profit of $420,000. At December 31, 2021, Molly's shares are trading at $17.25 per share. Both companies have a December 31 year end. Whispering Winds's is able to appoint one board member to Molly's board of directors who has been influential in directing the operations of the company.
(a)
Record the above transactions assuming Whispering Winds's uses the equity method to report its investment in Molly's Engines Ltd.
Jan 1. DR ?
CR ?
Dec 31. DR ?
CR ?
to record dividend recieved from associate
Dec 31. DR ?
CR ?
to record investment income from associate
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