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1. Let's assume you own 40% of another company. That other company has net income of $100,000 and pays out total dividends of $80,000.
What is our journal entry(ies)?
2. So assume we own 10% of another company. That company has net income of 80,000 ans makes dividend distributions of 50,000.
The reason we use the words favorable and unfavorable when evaluating variances is made clear when we look at the closing of accounts. To see this, consider that: Does Cost of Goods Sold increase or decrease when closing a favorable variance?
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