On January 15, 2012, National Star Inc. purchased 112,000 shares of Krypton Labs Inc. directly from...

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On January 15, 2012, National Star Inc. purchased 112,000 shares of Krypton Labs Inc. directly from one of the founders for a price of $36 per share. Krypton Labs
 has 400,000 shares outstanding, including the National Star shares. On July 2, 2012, Krypton paid $274,000 in total dividends to its shareholders. On December 31,
 2012, Krypton reported a net income of $1,028,000 for the year. National Star Inc. uses the equity method in accounting for its investment in Krypton Labs. Hide '
 Hint(s) a. Provide the National Star Inc. journal entries for the transactions involving its investment in Krypton Labs Inc. during XXXXXXXXXXJan XXXXXXXXXXJuly 2
 2012 Dec. 31 Hide Feedback Partially Correct Check My Work Feedback a. Jan 15: Increase the investment and decrease Cash for the purchase price (Shares x Per share
 amount). July 2: Calculate the ownership percentage by dividing the acquired shares by the total shares outstanding. Multiply the percentage by the total dividend
 and debit cash and credit Investment to reduce the investment by the share of dividends. b. Determine the December 31, 2012, balance of Investment in Krypton Labs
 Inc. Stock. $

David · Accepted Answer

Since the type of method used is equity method, the percentage of share is between 20-50%��Under the equity method, the investor records its share of the net income of the investee in the year when it is earned.��First we have to find out the share of Na
Since the type of method used is equity method, the percentage of share is between 20-50%
Under the equity method, the investor records its share of the net income of the investee in the year when it is earned.

On January 15, 2012, National Star Inc. purchased 112,000 shares of Krypton Labs Inc. directly from one of the founders for a price of $36 per share. Krypton Labs has 400,000 shares outstanding,...

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