On January 1, 2020, Fisher Corporation purchased 40 percent (82,000 shares) of the common stock of Bowden, Inc., for $988,000 in cash and began to use the equity method for the investment. The price paid represented a $66,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered appropriately valued on Bowden's books. Bowden declares and pays a $96,000 cash dividend to its stockholders each year on September 15. Bowden reported net income o $396,000 in 2020 and $352,000 in 2021. Each income figure was earned evenly throughout its respective years. On July 1, 2021, Fisher sold 10 percent (20,500 shares) of Bowden's outstanding shares for $332,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process. Prepare the journal entries for Fisher for the years of 2020 and 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar)
On January 1, 2020, Fisher Corporation purchased 40 percent (82,000 shares) of the common stock of Bowden, Inc., for $988,000 in cash and began to use the equity method for the investment. The price paid represented a $66,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered appropriately valued on Bowden's books. Bowden declares and pays a $96,000 cash dividend to its stockholders each year on September 15. Bowden reported net income o $396,000 in 2020 and $352,000 in 2021. Each income figure was earned evenly throughout its respective years. On July 1, 2021, Fisher sold 10 percent (20,500 shares) of Bowden's outstanding shares for $332,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process. Prepare the journal entries for Fisher for the years of 2020 and 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give image format
Transcribed Image Text:No
1
Date
01/01/2020
Investment in Bowden
Cash
Cash
Cash
Investment in Fisher
Answer is not complete.
General Journal
✓
X
X
Debit
988,000
-38,400
-158,400
Credit
988,000
-38,400
-158,400 X
Transcribed Image Text:On January 1, 2020, Fisher Corporation purchased 40 percent (82,000 shares) of the common stock of Bowden, Inc., for $988,000 in
cash and began to use the equity method for the investment. The price paid represented a $66,000 payment in excess of the book
value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently
developed patent held by Bowden with a 15-year remaining life. All other assets were considered appropriately valued on Bowden's
books.
Bowden declares and pays a $96,000 cash dividend to its stockholders each year on September 15. Bowden reported net income of
$396,000 in 2020 and $352,000 in 2021. Each income figure was earned evenly throughout its respective years.
On July 1, 2021, Fisher sold 10 percent (20,500 shares) of Bowden's outstanding shares for $332,000 in cash. Although it sold this
interest, Fisher maintained the ability to significantly influence Bowden's decision-making process.
Prepare the journal entries for Fisher for the years of 2020 and 2021. (If no entry is required for a transaction/event, select "No
journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest
whole dollar.)
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