Worksheet, direct and indirect holding, intercompany merchandise, machine. The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December 31, 2018:
Mary Company purchases its interest in John Company on January 1, 2016, for $204,000. John Company purchases its interest in Joan Company on January 1, 2017, for $75,000. Mary Company purchases its interest in Joan Company on January 1, 2018, for $72,000. All investments are accounted for under the equity method. Control over Joan Company does not occur until the January 1, 2018, acquisition. Thus, a D&D schedule will be prepared for the investment in Joan as of January 1, 2018.
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