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Put Company paid $220,000 for an 80% interest in Sel Company on July 1, 2011, when Sel Company had total equity of $110,000. Sel Company reported earnings of $10,000 for 2011 and declared dividends of $8,000 on November 1, 2011.

REQUIRED: Give the entries to record these facts on the books of Put Company:

1. Assuming that Put Company uses the cost method of accounting for its subsidiaries.

2. Assuming that Put Company uses the equity method of accounting for its subsidiaries. (Any difference between investment cost and book value acquired is to be assigned to equipment and amortized over a 10-year period.)

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M949006

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