esOn January 1, 2023, Corgan Company acquired 70 percent of the outstanding votingstock of Smashing, Incorporated, for a total of $1,435,000 in cash and otherconsideration. At the acquisition date, Smashing had common stock of $920,000,retained earnings of $470,000, and a noncontrolling interest fair value of $615,000.Corgan attributed the excess of fair value over Smashing's book value to variouscovenants with a 20-year remaining life. Corgan uses the equity method to account forits investment in Smashing.During the next two years, Smashing reported the following:Items20232024Net Income$ 370,000350,000DividendsDeclared$ 57,00067,000Inventory Purchasesfrom Corgan$ 320,000340,000Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of2023 and 2024, 30 percent of the current year purchases remain in Smashing'sinventory.Required:a. Compute the equity method balance in Corgan's Investment in Smashing,Incorporated, account as of December 31, 2024.b. Prepare the worksheet adjustments for the December 31, 2024, consolidation ofCorgan and Smashing.

Part (b): Worksheet Adjustments for December 31, 2024.1. Equity Income Adjustment:Add Corgan's share…

Answered: es On January 1, 2023, Corgan Company…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,440,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $870,000, retained earnings of $420,000, and a noncontrolling Interest fair value of $360,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for Its Investment in Smashing. During the next two years, Smashing reported the following: Dividends Declared Items 2023 2024 Net Income $ 320,000 300,000 $ 52,000 62,000 Required A Required B Inventory Purchases from Corgan Corgan sells Inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the current year purchases remain in Smashing's Inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of…
On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,435.000 in cash and other consideration. At the acquisition date, Smashing had common stock of $920,000, retained earnings of $470,000, and a noncontrolling interest fair value of $615,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income 2020 $370,000 2021 350,000 Dividends Declared $57,000 67,000 Inventory Purchases from Corgan $320,000 340,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 percent of the current year purchases remain in Smashing's inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet…
On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $880,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $730,000, retained earnings of $280,000, and a noncontrolling Interest fair value of $220,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Itens 2823 2824 Net Incone $188,008 168,000 Dividends Declared $ 38,000 48,000 Inventory Purchases from Corgan $130,000 150,000 Corgan sells Inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 50 percent of the current year purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31,…
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