Watson Corporation owns equity-method investments in several companies. Suppose Watson paid $1,200,000 to acquire a 35% investment in Smith Software Company. Smith Software reported net income of $650,000 for the first year and declared and paid cash dividends of $440,000.Requirements1. Record the following in Watson’s journal: (a) Purchase of the investment(b) Watsons proportion of Smith Software’s net income(c) Receipt of the cash dividends.2. What is the ending balance in Watsons investment account?View Solution:
Watson Corporation owns equity method investments in several com

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