At December 31,2012 year-end,Arnold Corporation's investment in Oakes Inc.was $200,000 consisting of 80% of Oakes's $250,000 stockholders' equity on that date.On April 1,2013,Arnold sold 20% interest (one-fourth of its holdings)in Oakes for $65,000.During 2013,Oakes had net income of $75,000 (earned uniformly)and on July 1,2013,Oakes paid dividends of $40,000.Arnold 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 Arnold for the year ending December 31,2013.Use the beginning-of-the-year-sale-date assumption.

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The Answer of At December 31,2012 year-end,Arnold Corporation's investment in Oakes Inc.was $200,000 consisting of 80% of Oakes's $250,000 stockholders' equity on that date.On April 1,2013,Arnold sold 20% interest (one-fourth of its holdings)in Oakes for $65,000.During 2013,Oakes had net income of $75,000 (earned uniformly)and on July 1,2013,Oakes paid dividends of $40,000.Arnold 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 Arnold for the year ending December 31,2013.Use the beginning-of-the-year-sale-date assumption.

At December 31,2012 Year-End,Arnold Corporation's Investment in Oakes Inc