[Monica1966]

I have 2 questions to ask on my studies to know if I done them correct..
I will only send 1 question at a time,as I don't think I am allow to ask them both on 1 page

I am not sure if I have done this right Plexiglass,inc.purchased 80% of outstanding common stock of Sunglass Company on January 1,20X3 for $1,500,000.During the year 20X3,Sunglass reports net income of $100,000 and declares dividends of $5,000.Prir to consonsolidation of emiminstion entries,the balance in plexiglass's Investments in the Sunglass Company account was

A) $1,576,000
B)$1,595,000
c) $1,600,000
D) 1,836,000

I am unsure if my figures of $1,600,000 is correct
At first I figured it to be $1,595,000, But once I done it over again I got $1,600,000
If you could help me on that if I have done it incorrect or correct
Thank you in advance for all your help

[Just Looking]

I think it is best to keep questions separate, and to use a descriptive title. This will help future students who have similar questions. It also will simplify asking and answering your questions.

The easiest way to understand this question is to look at the journal entries that would be written.



Cash...........................................4,0 00
Investment in Sunglass.............................4,000
To record dividend issued

Investment in Sunglass.................80,000
Income from subsidiary.............................80,000
To record income at 80%

I know this area is confusing. I looked for a website that might fully explain it. This one seemed pretty good in that it goes through the entries for the initial acquisition, and entries for two years of operation. It also shows what the entries would have been prior to 2009, when the rules for acquisitions changed.

Highered.mcgraw-hill.com/sites/dl/free/0073526916/590083/Chap005.ppt

You might also listen to this series of classes on you tube which will go through accounting questions on consolidation entries. The speaker is easy to follow, I think, and has many different topics posted.

‪Advanced Accounting 12: Consolidation/ Majority Owned Sub‬‏ - YouTube

‪Advanced Accounting 13: Consolidation of Subsidiaries‬‏ - YouTube

http://www.youtube.com/watch?v=cwMU6O5QoeY

[Monica1966]

Thank you for your help and taking the time to find websights for me
I find this area very confusing, when my brain finallys clicks and gets this I will be happy.. Hope its soon,I am doing at home studies so it's a bit harder when you don't have a instructor showing you how to do this... You have been fantastic in helping me
Thank you again,