On July 1, 2013, Mecca Group purchased for cash 35 percent of the outstanding capital stock of Wembley Studios.Both Mecca Group and Wembley Studios have a December 31 year-end.Wembley Studios, whose common stock is actively traded in the over-the-counter market, reported its total net income for the year to Mecca Group and also paid cash dividends on November 15, 2013, to Mecca Group and its other stockholders.
How should Mecca Group report the above facts in its December 31, 2013, balance sheet and its income statement for the year then ended? Discuss the rationale for your answer.

Question

Quizplus · Accepted Answer

The Answer of On July 1, 2013, Mecca Group purchased for cash 35 percent of the outstanding capital stock of Wembley Studios.Both Mecca Group and Wembley Studios have a December 31 year-end.Wembley Studios, whose common stock is actively traded in the over-the-counter market, reported its total net income for the year to Mecca Group and also paid cash dividends on November 15, 2013, to Mecca Group and its other stockholders.
How should Mecca Group report the above facts in its December 31, 2013, balance sheet and its income statement for the year then ended? Discuss the rationale for your answer.

On July 1, 2013, Mecca Group Purchased for Cash 35