Jacob Corporation paid $536,200 for a 30% share of Gardner Enterprises on January 1 of the current year. Gardner reported net assets at a book value of $1,414,000 on the date of acquisition. On the date of acquisition, it was determined that Gardner’s plant assets were undervalued by $118,000. Gardner’s plant assets have a 10-year remaining life and are depreciated by the straight-line method with no residual value. Gardner reported net income of $224,000 and declared and paid cash dividends of $182,000 during the current year. Finally, Gardner’s common shares are valued at $1,737,667 at the end of the current year Assume that Jacob Corporation sold the investment for $540,000 on January 1 of the next year. Prepare the journal entries required to record the sale of the investment under both the fair value option and the equity methods. 2. Prepare a schedule that compares the amount and timing of revenue recognition for the fair value option and the equity methods
Jacob Corporation paid $536,200 for a 30% share of Gardner Enterprises on January 1 of the current year. Gardner reported net assets at a book value of $1,414,000 on the date of acquisition. On the date of acquisition, it was determined that Gardner’s plant assets were undervalued by $118,000. Gardner’s plant assets have a 10-year remaining life and are depreciated by the straight-line method with no residual value. Gardner reported net income of $224,000 and declared and paid cash dividends of $182,000 during the current year. Finally, Gardner’s common shares are valued at $1,737,667 at the end of the current year Assume that Jacob Corporation sold the investment for $540,000 on January 1 of the next year. Prepare the journal entries required to record the sale of the investment under both the fair value option and the equity methods. 2. Prepare a schedule that compares the amount and timing of revenue recognition for the fair value option and the equity methods
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Jacob Corporation paid $536,200 for a 30% share of Gardner Enterprises on January 1 of the current year. Gardner reported net assets at a book value of $1,414,000 on the date of acquisition. On the date of acquisition, it was determined that Gardner’s plant assets were undervalued by $118,000. Gardner’s plant assets have a 10-year remaining life and are
- Assume that Jacob Corporation sold the investment for $540,000 on January 1 of the next year. Prepare the
journal entries required to record the sale of the investment under both the fair value option and the equity methods.
2. Prepare a schedule that compares the amount and timing of revenue recognition for the fair value option and the equity methods
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