Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $210,000 in cash. The book value of Kinman's net assets on that date was $400,000, although one of the company's buildings, with a $60,000 carrying amount, was actually worth $100,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $85,000. Kinman sold Inventory with an original cost of $60,000 to Harper during 2023 at a price of $90,000. Harper still held $15,000 (transfer price) of this amount in Inventory as of December 31, 2023. These goods are to be sold to outside parties during 2024. Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2023. The company still manages to declare and pay a $10,000 cash dividend during the year. During 2024, Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory sales of $80,000 to Harper during the period. The original cost of the merchandise was $50,000. All but 30 percent of this inventory had been resold to outside parties by the end of the 2024 fiscal year. Required: Prepare all journal entries for Harper for 2023 and 2024 in connection with this Investment. Assume that the equity method is applied. Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. Do not round Intermediate calculations. View transaction list Journal entry worksheet < 1 2 3 4 5678 12 > Record the accrual of income and OCI from equity investee. Note: Enter debits before credits. Date General Journal 12/31/2023 Equity in Investee Income Other comprehensive loss of Kinman Debit Credit
Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $210,000 in cash. The book value of Kinman's net assets on that date was $400,000, although one of the company's buildings, with a $60,000 carrying amount, was actually worth $100,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $85,000. Kinman sold Inventory with an original cost of $60,000 to Harper during 2023 at a price of $90,000. Harper still held $15,000 (transfer price) of this amount in Inventory as of December 31, 2023. These goods are to be sold to outside parties during 2024. Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2023. The company still manages to declare and pay a $10,000 cash dividend during the year. During 2024, Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory sales of $80,000 to Harper during the period. The original cost of the merchandise was $50,000. All but 30 percent of this inventory had been resold to outside parties by the end of the 2024 fiscal year. Required: Prepare all journal entries for Harper for 2023 and 2024 in connection with this Investment. Assume that the equity method is applied. Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. Do not round Intermediate calculations. View transaction list Journal entry worksheet < 1 2 3 4 5678 12 > Record the accrual of income and OCI from equity investee. Note: Enter debits before credits. Date General Journal 12/31/2023 Equity in Investee Income Other comprehensive loss of Kinman Debit Credit
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
Related questions
Question
Transcribed Image Text:Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $210,000 in
cash. The book value of Kinman's net assets on that date was $400,000, although one of the company's buildings, with a $60,000
carrying amount, was actually worth $100,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a
20-year remaining life that was undervalued by $85,000.
Kinman sold Inventory with an original cost of $60,000 to Harper during 2023 at a price of $90,000. Harper still held $15,000 (transfer
price) of this amount in Inventory as of December 31, 2023. These goods are to be sold to outside parties during 2024.
Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2023. The company still manages to declare and
pay a $10,000 cash dividend during the year.
During 2024, Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory
sales of $80,000 to Harper during the period. The original cost of the merchandise was $50,000. All but 30 percent of this inventory
had been resold to outside parties by the end of the 2024 fiscal year.
Required:
Prepare all journal entries for Harper for 2023 and 2024 in connection with this Investment. Assume that the equity method is applied.
Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. Do not round
Intermediate calculations.
View transaction list
Journal entry worksheet
<
1 2
3
4
5678
12
>
Record the accrual of income and OCI from equity investee.
Note: Enter debits before credits.
Date
General Journal
12/31/2023 Equity in Investee Income
Other comprehensive loss of Kinman
Debit
Credit
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning