On January 1, 2011, Youder Inc. bought 120,000 shares of Nopple Co. for $384,000, giving Youder 30% ownership and the ability to apply significant influence to the operating and financing decisions of Nopple. Youder anticipated holding this investment for an indefinite time. In making this acquisition, Youder paid an amount equal to the book value for these shares. The fair value of each asset and liability was the same as its book value. Dividends and income for Nopple for 2011 were as follows:
Required:
Assume a 40% income tax rate. Prepare all necessary journal entries for Youder for 2011 beginning at acquisition and ending at tax accrual.

Question

On January 1, 2011, Youder Inc. bought 120,000 shares of Nopple Co. for $384,000, giving Youder 30% ownership and the ability to apply significant influence to the operating and financing decisions of Nopple. Youder anticipated holding this investment for an indefinite time. In making this acquisition, Youder paid an amount equal to the book value for these shares. The fair value of each asset and liability was the same as its book value. Dividends and income for Nopple for 2011 were as follows:  
 Required:
Assume a 40% income tax rate. Prepare all necessary journal entries for Youder for 2011 beginning at acquisition and ending at tax accrual.

Quizplus · Accepted Answer

The Answer of On January 1, 2011, Youder Inc. bought 120,000 shares of Nopple Co. for $384,000, giving Youder 30% ownership and the ability to apply significant influence to the operating and financing decisions of Nopple. Youder anticipated holding this investment for an indefinite time. In making this acquisition, Youder paid an amount equal to the book value for these shares. The fair value of each asset and liability was the same as its book value. Dividends and income for Nopple for 2011 were as follows:  
 Required:
Assume a 40% income tax rate. Prepare all necessary journal entries for Youder for 2011 beginning at acquisition and ending at tax accrual.