On 3 January 20X4, Windsor Company purchased 20% of the shares of Brampton for $640,000 cash. Windsor will use the equity method. On this date, Brampton has $1, 810, 000 of assets, $1, 448,000 of liabilities, and $362, 000 of equity. Book values reflect fair values except for $810, 000 of equipment, which has a five-year life and a fair value of $1,012, 500. In 20X4, Brampton pays $24, 600 of total dividends and reports earnings of $82, 000. Required: 1. Calculate goodwill on acquisition and the annual extra depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the investment made in Brampton Corp. Record the Investment revenue. Record the receipts of cash dividends paid by Brampton. 3. At the end of 20X4, what is the balance in the investment account?

On 3 January 20X4, Windsor Company purchased 20% of the shares of Brampton for $640,000 cash. Windsor will use the equity method. On this date, Brampton has $1, 810, 000 of assets, $1, 448,000 of liabilities, and $362, 000 of equity. Book values reflect fair values except for $810, 000 of equipment, which has a five-year life and a fair value of $1,012, 500. In 20X4, Brampton pays $24, 600 of total dividends and reports earnings of $82, 000. Required: 1. Calculate goodwill on acquisition and the annual extra depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the investment made in Brampton Corp. Record the Investment revenue. Record the receipts of cash dividends paid by Brampton. 3. At the end of 20X4, what is the balance in the investment account?

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On 3 January 20X4, Windsor Company purchased 20% of the shares of Brampton for $640,000 cash.
Windsor will use the equity method. On this date, Brampton has $1, 810, 000 of assets, $1, 448,000 of
liabilities, and $362, 000 of equity. Book values reflect fair values except for $810,000 of equipment, which
has a five-year life and a fair value of $1,012,500. In 20X4, Brampton pays $24, 600 of total dividends and
reports earnings of $82,000. Required: 1. Calculate goodwill on acquisition and the annual extra
depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If
no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the investment made in Brampton Corp. Record the Investment revenue. Record the receipts of cash
dividends paid by Brampton. 3. At the end of 20X4, what is the balance in the investment account?

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