investor Corporation purchased 8,000 shares (20%) of Investee Companyâ€™s outstanding stock at a cost of $150,000.
Investee Company announced that it net incomeÂ for the year was $100,000.
Investee Company declared and paid a cash dividend
Investee Company announced that its net incomeÂ for the year was $80,000.
InvestorcorporaionÂ sold all of its shares of Investee Company for $178,000 cash
Prepare journal entries on Investor Corporationâ€™s books using theeqityÂ method, which assumes that Investor has significant influence over Investee Company.
Prepare journal entries on Investor Corporationâ€™s books using the cost method, which assumes that even though Investor owns 20% of Invitees stock, Investor does not have significant influence over Investee (for example, another corporation owns 70% of Investee Companyâ€™stock).
Write a brief report between 200-300 words in length outlining your recommendations to senior management based on the information presented here.