Apex Ltd acquired 10 percent of Santa Corporation on January 1, 2017, for 186,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Apex purchased an additional 30 percent of Santa for 661,000 which resulted in significant influence over Santa. On that date, the fair value of Santa’s common stock was 2,030,000 in total. Santa’s January 1, 2018 book value equaled 1,880,000, although land was undervalued by 135,000. Any additional excess fair value over Santa’s book value was attributable to a trademark with an 8-year remaining life. During 2018, Santa’s reported income of 345,000 and declared and paid dividends of 100,000. Prepare the 2018 journal entries for Apex related to its investment in Santa.
Apex Ltd acquired 10 percent of Santa Corporation on January 1, 2017, for 186,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Apex purchased an additional 30 percent of Santa for 661,000 which resulted in significant influence over Santa. On that date, the fair value of Santa’s common stock was 2,030,000 in total. Santa’s January 1, 2018 book value equaled 1,880,000, although land was undervalued by 135,000. Any additional excess fair value over Santa’s book value was attributable to a trademark with an 8-year remaining life. During 2018, Santa’s reported income of 345,000 and declared and paid dividends of 100,000.
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