Compute book value of nover’s long-term equity investment

Reference no: EM131408410

On January 1, 2011, Nover Solar Systems purchased 10,000 shares of Reilly Manufacturing for $190,000. The investment represented 25 percent of Reilly's outstanding common stock. Nover intended to hold the investment indefinitely. During 2011, Reilly earned net income of $75,000, and during 2012, Reilly suffered a net loss of $6,000. Reilly paid dividends both years of $1.50 per share.

a. Prepare all relevant journal entries that would be recorded on Nover's books during 2011 and 2012.

b. Compute the book value of Nover's long-term equity investment account as of December 31, 2011, and December 31, 2012.

Reference no: EM131408410

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