Your company purchases 48 000 shares of XYZ c for 10 a share xxx xxx Fair Value Method Equity Method 1 Record Purchase of Investment x x Available for Sale Securities x x Investment in XYZ co Cash Cash 2 Dec 31 Y1 XYZ reports Net Income of 200 000 NO ENTRY x x Investment in XYZ co Revenue from Investment NOTE NI ownership 200 000 20 40 000 3 Dec 31 Y1 XYZ stock has a FMV of 12 per share 480 000 480 000 40 000 x x Securites FV Adjustment AFS 96 000 Unrealized Holding G L AFS NO ENTRY NOTE FMV shares cost shares 12 48 000 10 48 000 576 000 480 000 96 000 4 On 1 1 XYZ declares and pays a cash dividend of 100 000 x x Cash x x Cash Dividend Revenue Invesment in XYZ 20 000 20 000 NOTE ownership amount of dividend unless otherwise stated 5 XYZ reports a Net Loss of 50 000 NO ENTRY x x Loss On Investment 10 000 NOTE Loss ownership 50 000 20 10 000 Investment ing XYZ Your company purchases 48 000 shares of XYZ c for 10 a share 1 Record Purchase of Investment 2 Dec 31 Y1 XYZ reports Net Income of 200 000 3 Dec 31 Y1 XYZ stock has a FMV of 12 per share FMV shares cost shares 12 48 000 10 48 000 576 000 480 000 96 000 4 On 1 1 XYZ declares and pays a cash dividend of 100 000 5 XYZ reports a Net Loss of 50 000 480 000 480 000 40 000 96 000 20 000 20 000 10 000
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