ate of the business combination. Server reported net income of $30,000 and paid dividends of $12,000 in 20X3. "equired: Prepare the journal entries recorded by Proxy during 20X3 on its books if it accounts for its investment in Server sing the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first ccount field.) View transaction list Journal entry worksheet
ate of the business combination. Server reported net income of $30,000 and paid dividends of $12,000 in 20X3. "equired: Prepare the journal entries recorded by Proxy during 20X3 on its books if it accounts for its investment in Server sing the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first ccount field.) View transaction list Journal entry worksheet
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Server Corporation is a majority-owned subsidiary of Proxy Corporation. Proxy acquired 75 percent ownership on
January 1, 20X3, for $133,500. At that date, Server reported common stock outstanding of $60,000 and retained
earnings of $90,000, and the fair value of the noncontrolling interest was $44,500. The differential is assigned to
equipment, which had a fair value $28,000 more than book value and a remaining economic life of seven years at the
date of the business combination. Server reported net income of $30,000 and paid dividends of $12,000 in 20X3.
Required:
a. Prepare the journal entries recorded by Proxy during 20X3 on its books if it accounts for its investment in Server
using the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first
account field.)
View transaction list
Journal entry worksheet
A B C D
Record the initial investment in Server Corp.
Note: Enter debits before credits.
General Journal
Event
1
Record entry
Clear entry
view transaction list
Consolidation
Worksheet Entries
<A B C
Record the basic consolidation entry.
Note: Enter debits before credits.
Event
1
T
b. Prepare the consolidation entries needed at December 31, 20X3, to prepare consolidated financial statements. (If no
entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Accounts
Debit Credit
View general journal
>
Debit Credit
>
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