On January 1, 2020, CC Company acquired 60,000 shares of RR Limited at $5 per share, representing 20% of RR's outstanding voting shares. On July 31, 2020, RR declared and paid a dividend of $1 per share. RR's net income for 2020 was $2,800,000. On December 31, 2020, the shares of RR were trading on the Toronto Stock Exchange at $16 per share.
Required:
Provide the journal entries on CC's books relating to its investment in RR, assuming that CC classifies RR as an associate.

Question

Quizplus · Accepted Answer

The Answer of On January 1, 2020, CC Company acquired 60,000 shares of RR Limited at $5 per share, representing 20% of RR's outstanding voting shares. On July 31, 2020, RR declared and paid a dividend of $1 per share. RR's net income for 2020 was $2,800,000. On December 31, 2020, the shares of RR were trading on the Toronto Stock Exchange at $16 per share.
Required:
Provide the journal entries on CC's books relating to its investment in RR, assuming that CC classifies RR as an associate.

On January 1, 2020, CC Company Acquired 60,000 Shares of RR