Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $243,700 In cash. The book value of Kinman's net assets on that date was $460,000, although one of the company's buildings, with a $74,200 carrying amount, was actually worth $118,450. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20- year remaining life that was undervalued by $105,000. Kinman sold Inventory with an original cost of $126,000 to Harper during 2023 at a price of $180,000. Harper still held $20,400 (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 $50,600 net loss and a $28,300 other comprehensive loss for 2023. The company still manages to declare and pay a $18,000 cash dividend during the year. During 2024, Kinman reported a $57,800 net Income and declared and paid a cash dividend of $20,000. It made additional Inventory sales of $134,000 to Harper during the period. The original cost of the merchandise was $83,750. 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 fleld. Do not round Intermediate calculations. View transaction list Journal entry worksheet 1 2 < 3 4 5 6 7 Record the initial investment. Note: Enter debits before credits. Date 01/01/2023 Record entry General Journal Clear entry 8 ***** Debit 12 Credit View general journal >
Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $243,700 In cash. The book value of Kinman's net assets on that date was $460,000, although one of the company's buildings, with a $74,200 carrying amount, was actually worth $118,450. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20- year remaining life that was undervalued by $105,000. Kinman sold Inventory with an original cost of $126,000 to Harper during 2023 at a price of $180,000. Harper still held $20,400 (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 $50,600 net loss and a $28,300 other comprehensive loss for 2023. The company still manages to declare and pay a $18,000 cash dividend during the year. During 2024, Kinman reported a $57,800 net Income and declared and paid a cash dividend of $20,000. It made additional Inventory sales of $134,000 to Harper during the period. The original cost of the merchandise was $83,750. 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 fleld. Do not round Intermediate calculations. View transaction list Journal entry worksheet 1 2 < 3 4 5 6 7 Record the initial investment. Note: Enter debits before credits. Date 01/01/2023 Record entry General Journal Clear entry 8 ***** Debit 12 Credit View general journal >
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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Transcribed Image Text:Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $243,700 in
cash. The book value of Kinman's net assets on that date was $460,000, although one of the company's buildings, with a $74,200
carrying amount, was actually worth $118,450. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-
year remaining life that was undervalued by $105,000.
Kinman sold Inventory with an original cost of $126,000 to Harper during 2023 at a price of $180,000. Harper still held $20,400
(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 $50,600 net loss and a $28,300 other comprehensive loss for 2023. The company still manages to declare and
pay a $18,000 cash dividend during the year.
During 2024, Kinman reported a $57,800 net Income and declared and paid a cash dividend of $20,000. It made additional Inventory
sales of $134,000 to Harper during the period. The original cost of the merchandise was $83,750. 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 fleld. Do not round
Intermediate calculations.
View transaction list
Journal entry worksheet
2
<
1
3 4 5 6 7 8
Record the initial investment.
Note: Enter debits before credits.
Date
01/01/2023
Record entry
General Journal
Clear entry
*****
Debit
12
Credit
View general journal
>
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