Peregrine $ (700,000) Sprano (400,000) Revenues Cost of goods sold Depreciation expense Equity Income in Sprano Retained earnings, 1/1/21 250,000 100,000 150,000 200,000 ??? (600,000) (200,000) Dividends declared 80,000 60,000 Current assets 400,000 500,000 Сорyrights Royalty agreements Investment in Sprano 900,000 400,000 600,000 1,000,000 ??? (1,380,000) (200,000) (80,000) Liabilities (950,000) (600,000) (150,000) Common Stock ($20 par) Additional paid-in capital %24
Peregrine $ (700,000) Sprano (400,000) Revenues Cost of goods sold Depreciation expense Equity Income in Sprano Retained earnings, 1/1/21 250,000 100,000 150,000 200,000 ??? (600,000) (200,000) Dividends declared 80,000 60,000 Current assets 400,000 500,000 Сорyrights Royalty agreements Investment in Sprano 900,000 400,000 600,000 1,000,000 ??? (1,380,000) (200,000) (80,000) Liabilities (950,000) (600,000) (150,000) Common Stock ($20 par) Additional paid-in capital %24
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021:
On January 1, 2021, Peregrine acquired all of Sprano’s outstanding stock for $680,000 fair value in cash and common stock. At the date of acquisition, copyrights (with a 6-year remaining life) were undervalued by $120,000 (i.e., market value was higher than book value). Peregrine applies the equity method to maintain the Investment in Sprano account.
For the year ending December 31, 2021 determined the total Equity Income in Sprano reported in Peregrine’s book.
Transcribed Image Text:Peregrine
$ (700,000)
Sprano
(400,000)
Revenues
$
Cost of goods sold
250,000
100,000
Depreciation expense
150,000
200,000
Equity Income in Sprano
Retained earnings, 1/1/21
???
(600,000)
(200,000)
Dividends declared
80,000
60,000
Current assets
400,000
500,000
Copyrights
Royalty agreements
Investment in Sprano
900,000
400,000
600,000
1,000,000
???
Liabilities
Common Stock ($20 par)
Additional paid-in capital
(950,000)
(600,000)
(150,000)
(1,380,000)
(200,000)
(80,000)
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