On January 1, 2016, Greene Inc. purchased 25,000 shares of Bleau Corp. for $380,000. Bleau has a total of 100,000 common shares outstanding. This has allowed Greene Inc. to ensure a member of their company is on the board of directors for Bleau Corp. The fair value of Bleau Corp's next identifiable assets at the acquisition date was $1,200,000. Both companies have a December 31 year end. The following is true with regards to Bleau Corp. and the shares:
Net income for the year: $280,000
Total dividends declared and paid on July 1: $40,000
Market value of shares at December 31: $17 per share
2017: Net income for the year: ($120,000) loss
Total dividends declared and paid on July 1: $20,000
Market value of shares at December 31: $12 per share
1. What category would this investment go into and why?
2. Given your answer to (1) prepare all of Greene Inc.'s journal entries for 2016 and 2017.
3. What would be the balance in Greene's investment account at December 31, 2017?
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