edOn January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of$880,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $730,000, retained earnings of$280,000, and a noncontrolling interest fair value of $220,000. Corgan attributed the excess of fair value over Smashing's book valueto various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.During the next two years, Smashing reported the following:Items2023Net Income$ 180,000160,000DividendDeclare$ 38,00048,000Inventory Purchasesfrom Corgan$ 130,000150,0002024Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 50 percent of the current yearpurchases remain in Smashing's inventory.Required:a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024.b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of Corgan and Smashing.Complete this question by entering your answers in the tabs below.Required A Required BCompute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024.Investment balance 12/31/24$ 1,844,800Required ARequired B >

On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $880,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $730,000, retained earnings of $280,000, and a noncontrolling interest fair value of $220,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants 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: Items 2023 2024 Net Income $ 180,000 160,000 Dividend Declare $ 38,000 48,000 Inventory Purchases from Corgan $ 130,000 150,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 50 percent of the current year purchases remain in Smashing's inventory.

On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $880,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $730,000, retained earnings of $280,000, and a noncontrolling interest fair value of $220,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants 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: Items 2023 2024 Net Income $ 180,000 160,000 Dividend Declare $ 38,000 48,000 Inventory Purchases from Corgan $ 130,000 150,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 50 percent of the current year purchases remain in Smashing's inventory.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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