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Journalize Badger purchase of the stock

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Problem - Equity method for stock investment with loss

On January 10, 2012, Badger Co. purchased 30% of the outstanding stock of Crest Co. for $123,000. Crest paid total dividends to all shareholders of $15,000 on July 15. Crest had a net loss of $25,000 for 2012.

a. Journalize Badger's purchase of the stock, receipt of dividends, and adjusting entry for the equity loss in Crest Co. stock.

b. Compute the balance of Investment in Crest Co. Stock for December 31, 2012.

c. How does valuing an investment under the equity method differ from valuing an investment at fair value?

Reference no: EM132683699

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