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Problem IV - Stock Investments Mal, Inc, acquired 25% of the outstanding common stock of
Roy, Ine. on January 1, 2021, by paying $1 , 350 , 000 for 50,000 shares. Roy declared and paid
a $0.50 per share cash dividend on June 30 and again on December 31,2021 . Roy reported net
income of $600 , 000 for the year. At December 31,2021 , the market price of Roy's common
stock was $30 per share. Instruetions (a) Prepare the journal entries for Mal Inc, for 2021
assuming the company cannot exercise significant influence over Roy, Ine. (b) Prepare the
joumal entries for Mal Inc. for 2021, assuming the company can exercise significant influence
over Roy, Inc.

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  • 1. Problem IV - Stock Investments Mal, Inc, acquired 25% of the outstanding common stock of Roy, Ine. on January 1, 2021, by paying $1 , 350 , 000 for 50,000 shares. Roy declared and paid a $0.50 per share cash dividend on June 30 and again on December 31,2021 . Roy reported net income of $600 , 000 for the year. At December 31,2021 , the market price of Roy's common stock was $30 per share. Instruetions (a) Prepare the journal entries for Mal Inc, for 2021 assuming the company cannot exercise significant influence over Roy, Ine. (b) Prepare the joumal entries for Mal Inc. for 2021, assuming the company can exercise significant influence over Roy, Inc.