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Jan 1, SSS buys 60,000 shares of Inc at $20/share as a long-term investment in the...

Jan 1, SSS buys 60,000 shares of Inc at $20/share as a long-term investment in the stock portfolio. The purchase represents 25% of all outstanding Inc stock and SSS has representation on Inc’s board of directors. Journalize the purchase.

01/01

Stock Investments $12000000

Cash $12000000



On June 31, 2008 Inc reports net income of $20,000 for its fiscal year ended June 31. Make the journal entry for SSS.

06/31

Fair Value Adjustment-Stock $300000

Unrealized Gain or Loss-Income $300000


On October 1, Inc pays a $1/share cash dividend. Journalize SSS’s receipt of this dividend.

10/01

Cash $60000

Dividend Revenue $60000


On Dec 31, Inc shares are trading $18/share. What fair value adjustment, if any, needs to be made?




How will this stock be represented on the SSS balance sheet?

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