Question - Quahog purchased 10% of Clam on January 1, 2018 for $360,000 in cash and did not have the ability to exercise significant influence. The price was 10% of Clam's book value. During 2018, Clam reported income of $500,000 and paid dividend of $10,000. On December 21, 2018, the market value of Quahog's investment in Clam was $370,000. Then, on January 1, 2019, Quahog purchased an additional 20% of Clam for $500,000 in cash and was able to have significant influence. Quahog had been using the fair Value method, considering the securities to be available for sale.
Journalize all necessary entries on the books of Quahogs using the fair value method in 2018. Including the initial purchase.