On January 1, 2023, Fisher Corporation purchased 40 percent (70,000 shares) of the common stock of Bowden, Incorporated, for $974, 000 in cash and began to use the equity method for the investment. The price paid represented a $54,000 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 $388,000 in 2023 and $360,000 in 2024. Each income figure was earned evenly throughout its respective years. On July 1, 2024, Fisher sold 10 percent (17,500 shares) of Bowden's outstanding shares for $322,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process. Required: Prepare the journal entries for Fisher for the years of 2023 and 2024. Note: If no entry is required for a transaction/event , select "No journal entry required" in the first account field.
On January 1, 2023, Fisher Corporation purchased 40 percent (70,000 shares) of the common stock of Bowden, Incorporated, for $974, 000 in cash and began to use the equity method for the investment. The price paid represented a $54,000 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 $388,000 in 2023 and $360,000 in 2024. Each income figure was earned evenly throughout its respective years. On July 1, 2024, Fisher sold 10 percent (17,500 shares) of Bowden's outstanding shares for $322,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process. Required: Prepare the journal entries for Fisher for the years of 2023 and 2024. Note: If no entry is required for a transaction/event , select "No journal entry required" in the first account field.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A-1
![On January 1, 2023, Fisher Corporation purchased 40 percent (70,000 shares) of the common stock of
Bowden, Incorporated, for $974, 000 in cash and began to use the equity method for the investment. The
price paid represented a $54, 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 $388,000 in 2023 and $360,000 in 2024. Each income
figure was earned evenly throughout its respective years. On July 1, 2024, Fisher sold 10 percent (17,500
shares) of Bowden's outstanding shares for $322,000 in cash. Although it sold this interest, Fisher
maintained the ability to significantly influence Bowden's decision-making process. Required: Prepare the
journal entries for Fisher for the years of 2023 and 2024. Note: If no entry is required for a transaction/event
, select "No journal entry required" in the first account field.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa67777da-4b55-4cc7-85c7-4cd85410f300%2Fc1cc9183-d4d3-474c-9f05-b472eb7fc1f5%2Fxpgbarb_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2023, Fisher Corporation purchased 40 percent (70,000 shares) of the common stock of
Bowden, Incorporated, for $974, 000 in cash and began to use the equity method for the investment. The
price paid represented a $54, 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 $388,000 in 2023 and $360,000 in 2024. Each income
figure was earned evenly throughout its respective years. On July 1, 2024, Fisher sold 10 percent (17,500
shares) of Bowden's outstanding shares for $322,000 in cash. Although it sold this interest, Fisher
maintained the ability to significantly influence Bowden's decision-making process. Required: Prepare the
journal entries for Fisher for the years of 2023 and 2024. Note: If no entry is required for a transaction/event
, select "No journal entry required" in the first account field.
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