Ship corporation had outstanding 100,000 shares of no-par common stock. On January 10, 2010 Shore Company purchased a block of these shares in the open market at $20 per share for long-term investment purchases. At the end of 2010, Ship reported net income of $400,000 and cash dividends of $1.60 per share. At December 31, 2010 Ship's stock was selling at $18 per share.
Case A: Purchase of 10,000 shares of Ship common stock.
Case B: Purchase of 40,000 shares of Ship common stock.
b. For each case, identify the journal entries for each of the following: Acquisitiion, revenue recognition, dividends receieved, market value effects
c.For each case, show how the following should be reported on the 2010 financial statements: long-term investments, Owner's equity, revenues.
d. Explain why the amounts reported for the two cases in (c) differ.