On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation. Barber used the equity method to account for the investment. The following information is available for Thompson’s assets, liabilities, and stockholders' equity accounts on January 1, 2020: BookValueFairValueCurrent assets$130,000 $130,000 Land 75,000 193,000 Building (twenty year life) 250,000 276,000 Equipment (ten year life) 540,000 518,000 Current liabilities 26,000 26,000 Long-term liabilities 124,000 124,000 Common stock 233,000 Additional paid-in capital 389,000 Retained earnings 223,000 Thompson earned net income for 2020 of $134,000 and paid dividends of $51,000 during the year.In Barber's accounting records, what amount would appear on December 31, 2020 for equity in subsidiary earnings?

A subsidiary, in the business world, is a corporation that belongs to another corporation, generally…

Answered: January 1, 2020, Barber Corp. paid…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation. Barber used the equity method to account for the investment. The following information is available for Thompson’s assets, liabilities, and stockholders' equity accounts on January 1, 2020:

	Book Value	Fair Value
Current assets	$	130,000	$	130,000
Land		75,000		193,000
Building (twenty year life)		250,000		276,000
Equipment (ten year life)		540,000		518,000
Current liabilities		26,000		26,000
Long-term liabilities		124,000		124,000
Common stock		233,000
Additional paid-in capital		389,000
Retained earnings		223,000

Thompson earned net income for 2020 of $134,000 and paid dividends of $51,000 during the year.

In Barber's accounting records, what amount would appear on December 31, 2020 for equity in subsidiary earnings?

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