Brief Exercise 14-28
Recording Entries
under the Equity
Method LO5
Hint: See Demo 14-5
rief Exercise 14-29
On January 1, 2020, Evergreen Inc. purchased 3,750 of the 15,000 outstanding shares of common stock of Na
ture Net Inc. obtaining significant influence of the company. The shares were purchased for $5,000 cash and Ev
ergreen Inc. intends for it to be a long-term investment. During the year, Nature Net Inc. reported net income of
$26,000 and declared and paid dividends of $12,000.
a. Prepare Evergreen Inc.'s entry on January 1, 2020, for the purchase of the equity investment.
b. Prepare Evergreen Inc.'s entries on December 31, 2020, to record investment income and declaration of
dividends for 2020.
c. What is the ending balance of the Investment account on December 31, 2020?
On January 1, 2020, Hockey Unlimited Inc. purchased 2,500 of the 10.000 outstanding common share of