Matrix, Inc., acquired 25% of Neo Enterprises for $2,000,000 on January 1, 2016. The fair value and book value of 25% of Neo’s identifiable net…

Matrix, Inc., acquired 25% of Neo Enterprises for $2,000,000 on January 1, 2016. The fair value and book value of 25% of Neo’sidentifiable net assets were identical on that date. During 2016, Neo recognized net income of $500,000 and paid dividends of$400,000. Neo had a total fair value of $10,000,000 as of December 31, 2016. Matrix does not intend to sell its shares in Neo for the foreseeable future. REQUIRED: a. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix has no significant influence on Neo. b. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix has significant influence on Neo.
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