Pharoah Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,177,500 for 47,100 shares.
Pharoah Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,177,500 for 47,100 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $659,000 for 2021. The fair value of Kulikowski’s stock was $28 per share at December 31, 2021. Prepare the journal entries for Pharoah Inc. for 2020 and 2021, assuming that Pharoah cannot exercise significant influence over Kulikowski.
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