Monroe Company purchased ốf Adams Company on January 1, The purchase price paid was $600,000. On that day, the book value of Adams was $500,000. Excess of cost over book value is due to goodwill. Included in Adams's income are intercompany sales to Monroe of $40,000 with a cost to Adams of $25,000. 30% of this inventory is on hand in the Monroe inventory at December 31, 20X3. In addition, inventory sold at a profit of $5,000 was in the inventory of Monroe at December 31, 20X2. Adams reported income of $100,000 in 20X3 but paid no dividends. а. Prepare a schedule of Excess of Cost over Book Value at the date of purchase. b. For 20X3, prepare on the books of Monroe the full equity method journal entries.

Monroe Company purchased ốf Adams Company on January 1, The purchase price paid was $600,000. On that day, the book value of Adams was $500,000. Excess of cost over book value is due to goodwill. Included in Adams's income are intercompany sales to Monroe of $40,000 with a cost to Adams of $25,000. 30% of this inventory is on hand in the Monroe inventory at December 31, 20X3. In addition, inventory sold at a profit of $5,000 was in the inventory of Monroe at December 31, 20X2. Adams reported income of $100,000 in 20X3 but paid no dividends. а. Prepare a schedule of Excess of Cost over Book Value at the date of purchase. b. For 20X3, prepare on the books of Monroe the full equity method journal entries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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