At December 31,2015 year-end,Lapwing Corporation's investment in Ground Inc.was $200,000 consisting of 80% of Ground's $250,000 stockholders' equity on that date.On April 1,2016,Lapwing sold 20% interest (one-fourth of its holdings)in Ground for $65,000.During 2016,Ground had net income of $75,000 (earned uniformly)and on July 1,2016,Ground paid dividends of $40,000.Lapwing uses the equity method to account for the investment.
Required:
1.What is the gain or loss on sale of the 20% interest?
2.Record the journal entries for Lapwing for the year ending December 31,2016.Use the actual-sale-date assumption.

Question

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The Answer of At December 31,2015 year-end,Lapwing Corporation's investment in Ground Inc.was $200,000 consisting of 80% of Ground's $250,000 stockholders' equity on that date.On April 1,2016,Lapwing sold 20% interest (one-fourth of its holdings)in Ground for $65,000.During 2016,Ground had net income of $75,000 (earned uniformly)and on July 1,2016,Ground paid dividends of $40,000.Lapwing uses the equity method to account for the investment.
Required:
1.What is the gain or loss on sale of the 20% interest?
2.Record the journal entries for Lapwing for the year ending December 31,2016.Use the actual-sale-date assumption.

At December 31,2015 Year-End,Lapwing Corporation's Investment in Ground Inc