Accounting for Equity Investments Harper purchased 35% of the outstanding shares of Maxwell Company on January 1 of the current year for $64,000 in cash. Maxwell's plant assets with a book value of $131,200 were appraised at $136,000, and Maxwell has an unrecorded patent with a fair value of $4,000. All of the remaining assets and liabilities were appraised at values approximating their book values. Assume that the undervalued plant assets have an estimated remaining useful life of 20 years, and the unrecorded patent has a useful life of 5 years. During the year, Maxwell reported net income of $52,000 and paid cash dividends to shareholders totaling $28,000. Required Prepare the entry to record Harper Company's equity in the earnings of Maxwell Company, including any amortization of the excess of fair value over book value of assets acquired in the financial statement effects template. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. Balance Sheet Cash Asset 0 Noncash Assets 0 Liabilities 0 Contrib. Capital 0 ◆ Earned Capital 0 # Income Statement Revenues 0 + N/A Expe
Accounting for Equity Investments Harper purchased 35% of the outstanding shares of Maxwell Company on January 1 of the current year for $64,000 in cash. Maxwell's plant assets with a book value of $131,200 were appraised at $136,000, and Maxwell has an unrecorded patent with a fair value of $4,000. All of the remaining assets and liabilities were appraised at values approximating their book values. Assume that the undervalued plant assets have an estimated remaining useful life of 20 years, and the unrecorded patent has a useful life of 5 years. During the year, Maxwell reported net income of $52,000 and paid cash dividends to shareholders totaling $28,000. Required Prepare the entry to record Harper Company's equity in the earnings of Maxwell Company, including any amortization of the excess of fair value over book value of assets acquired in the financial statement effects template. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. Balance Sheet Cash Asset 0 Noncash Assets 0 Liabilities 0 Contrib. Capital 0 ◆ Earned Capital 0 # Income Statement Revenues 0 + N/A Expe
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:пр
ry
0
Cash
Investment income
Interest Income
Investment in Maxwell
Retained Earnings
N/A
ora
im
Сс
C.
Transcribed Image Text:Accounting for Equity Investments
Harper purchased 35% of the outstanding shares of Maxwell Company on January 1 of the current year for $64,000 in cash. Maxwell's plant assets with a book value of
$131,200 were appraised at $136,000, and Maxwell has an unrecorded patent with a fair value of $4,000. All of the remaining assets and liabilities were appraised at values
approximating their book values. Assume that the undervalued plant assets have an estimated remaining useful life of 20 years, and the unrecorded patent has a useful life
of 5 years. During the year, Maxwell reported net income of $52,000 and paid cash dividends to shareholders totaling $28,000.
Required
Prepare the entry to record Harper Company's equity in the earnings of Maxwell Company, including any amortization of the excess of fair value over book value of assets
acquired in the financial statement effects template.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
Balance Sheet
Cash
Asset
0
Noncash
Assets
♦
Please answer all parts of the question.
0
Liabilities
0
Contrib.
Capital
0
Earned
Capital
0
♦
Income Statement
Revenues
0
N/A
Expe
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