On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $980,000 incash and other consideration. At the acquisition date, Smashing had common stock of $790,000, retained earnings of $340,000, and anoncontrolling interest fair value of $420,000. Corgan attributed the excess of fair value over Smashing's book value to variouscovenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.During the next two years, Smashing reported the following:InventoryDividends Purchases fromNet IncomeDeclaredCorgan$190,000210, 000$240, 000$44,00054,00020202021220,000Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 50 percent of the current yearpurchases remain in Smashing's inventory.a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021.b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing.Complete this question by entering your answers in the tabs below.Required ARequired BCompute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021.Investment balance 12/31/21Required ARequired B > Complete this question by entering your answers in the tabs below.Required ARequired BPrepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for atransaction/event, select "No journal entry required" in the first account field.)view transaction list:X:1 Prepare entry *G>2 Prepare entry S3 Prepare entry A4 Prepare entry I5 Prepare entry DCredit6 Prepare Entry E7 Prepare entry TI8 Prepare entry GNote := journal entry has been enteredRecord entryClear entryview consolidation entries

Equity method balance According to the equity method, the investing company must record the…

On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting cash and other consideration. At the acquisition date, Smashing had common stock o noncontrolling interest fair value of $420,000. Corgan attributed the excess of fair va covenants with a 20-year remaining life. Corgan uses the equity method to account f During the next two years, Smashing reported the following: Inventory Dividends Purchases from Declared $44,000 Net Income Corgan $190,000 2020 $240,000 2021 220, 000 54,000 210,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end o purchases remain in Smashing's inventory.

On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting cash and other consideration. At the acquisition date, Smashing had common stock o noncontrolling interest fair value of $420,000. Corgan attributed the excess of fair va covenants with a 20-year remaining life. Corgan uses the equity method to account f During the next two years, Smashing reported the following: Inventory Dividends Purchases from Declared $44,000 Net Income Corgan $190,000 2020 $240,000 2021 220, 000 54,000 210,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end o purchases remain in Smashing's inventory.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Rahul
On January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S's balance sheet on the purchase date is as follows: Basis Fair Market Value Assets Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S's tax rate is 21 percent. a. What is the aggregate basis of S's assets after this transaction? b. What is the basis for each individual asset?
Juniper Inc. acquired a 25% interest in Saturn Co. on January 1, 2021, for $260,000. During 2021, Saturn reported net income of $86,000, and paid a total cash dividend to shareholders in the amount of $16,000. Juniper uses the equity method to account for this investment. At the end of 2021, Juniper will report the following debit balance in the investment account: Question 6 options: $285,500 $260,000 $277,500 $281,500
Please help me
company's accounting year ends December 31. Date of Acquisition Cost 9/20/23 $38,000 10/2/23 14,000 Investment Colt Company stock Dana Company stock What amount is reported for gain or loss on these securities in 2023 income? Select one: O a. $800 loss O Fair Value 12/31/23 Date Sold Selling Price $37,000 2/10/24 $42,000 14,200 1/17/24 13,000 b. $1,000 loss c. No gain or loss d. $3,000 gain ہے
Razor Afternoon Co. owns 80% interest in Slice Morning Co. During 2019, Razor sold inventories costing ₱200,000 to Slice for ₱300,000. One-fourth of the inventories were unsold as of December 31, 2019 and were included in Slice’s year-end statement of financial position at the purchase price from Razor. The individual financial statements of Razor and Slice on December 31, 2019 show the following information: Razor Slice Inventory 1,260,000 380,000 Sales 6,700,000 2,700,000 Cost of sales (3,015,000) (1,755,000) Gross profit 3,685,000 945,000 There are no fair value adjustments arising from the business combination date. Write the Eliminating Entries for Periodic Inventory System.
Parent acquires 80% of Sub for $170,000 on December 31, 2014. In 2015 Sub has net income of $140,000 and paid dividends of $70.000. Amortization of excess fair value over book value for the year was $43,750. What is the Investment in Sub account balance as of December 31, 2015.
Company P acquired 90 percent of the common stock of Company S on 1/1/2020. During 2020, Company S reported a net income of $50,000 and dividends of $12,000. Company P uses the simple equity method to account for the investment in S. Which of the following entries is prepared by Company P when consolidating the financial statements for 2020? Debit Subsidiary Income $45,000, Credit Investment in S $45,000 Debit Investment in S $45,000, Credit Subsidiary Income $45,000 Debit Dividends Receivable $10,800, Credit Subsidiary Income $10,800 Debit Subsidiary Income $10,800, Credit Dividends Declared $10,800
e of cents Price Company purchased 90% of the outstanding common stock of Score Company on January 1, 2016, for $450,000. At that time, Score Company had stockholders' equity consisting of common stock, $200,000; other com $160,000; and retained earnings, $90,000. On December 31, 2020, trial balances for Price Company and Score Company were as follows: Price $ 109,000 $ Cash Accounts Receivable Note Receivable Inventory Investment in Score Company Plant and Equipment Land Score 78,000 94,000 -0- 166,000 75,000 309,000 158,000 450,000 -0- 940,000 420,000 160,000 70,000 70,000 50,000 822,000 242,000 250,500 124,000 Dividends Declared Cost of Goods Sold Operating Expenses Total Debits Accounts Payable Notes Payable Common Stock $3,351,500 $1,236,000 $ 132,000 $ 46,000 300,000 120,000 500,000 200,000 260,000 160,000 Other Contributed Capital Retained Earnings, 1/1 Sales Dividend and Interest Income Total Credits 687,000 1,420,000 52,500 $3.351,500 $1,236,000 210,000 500,000 -0- Price…
Ab Company bought 20% of CD Company' ordinary share on January 1, 2021 for P3,700,000. The carrying amount of CD's net assets at purchase date totaled P16,000,000. Fair values and carrying amount were the same for all items, except for inventory for which fair values exceed their carrying amount by P1,500,000. All inventories at January 1, 2021 were sold during the year. During 2021, CD reported profit of P7,500,000 and paid P1,500,000 cash dividends. What amount should AB Company report as income from investment in its 2021 profit or loss section of the statement of comprehensive income?
Weisman Company, a 100% owned subsidiary of Martindale Corporation, sells inventory to Martindale at a 20% profit on selling price. The following data are available pertaining to inter-company purchases by Martindale: 4. 5. a. b. Weisman's profit numbers were $125,000, $142,000 and $265,000 for 2020, 2021, and 2022, respectively. Martindale received dividends from Weisman of $25,000 for 2020 and 2021, and $30,000 for 2022. C. d. 3. Assume Weisman uses the equity method to account for its investment in Martindale. What is the balance in the pre-consolidation Income (loss) from subsidiary account for 2021? $136,000 a. b. Inter-company sales $18,000 $19,400 $21,500 C. d. 2020: 2021: 2022: a. b. C. d. $140,800 $141,600 $142,800 Assume Weisman uses the equity method to account for its investment in Martindale. What is the balance in pre-consolidation Income (loss) from subsidiary for 2022? Unsold at year end (based on selling price) 2020: 2021: 2022: $235,000 $264,600 $265,400 $268,600…