Pistol Corporation purchased 100 percent ownership of Scope Products on January 1, 20X6, for $61,000, at which time Scope Products reported retained earnings of $10,000 and capital stock outstanding of $27,000. The differential was attributable to patents with a life of eight years. Income and dividends of Scope Products were year net income dividends 20x6 26000 10000 20x7 34000 12000 20x8 42000 12000 Required: 1. Prepare the equity method entries that Pistol should record to account for this investment in 20X6, 20X7, and 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. Record the purchase of Scope Company. 2. Record the dividend from Scope Company for 20X6. 3. Record the equity-method income/loss for 20X6. 4. Record the amortization of the differential value for 20X6. 5.Record the dividend from Scope Company for 20X7. 6. Record the equity-method income/loss for 20X7. 7.Record the amortization of the differential value for 20X7. 8. Record the dividend from Scope Company for 20X8. 9.Record the equity-method income/loss for 20X8. 10. Record the amortization of the differential value for 20X8. 2. What is the balance of the Investment in Scope account on Pistol's balance sheet at December 31, 20X8, after all required equity method entries have been recorded? balance of investment account:
Pistol Corporation purchased 100 percent ownership of Scope Products on January 1, 20X6, for $61,000, at which time Scope Products reported
| year | net income | dividends |
| 20x6 | 26000 | 10000 |
| 20x7 | 34000 | 12000 |
| 20x8 | 42000 |
12000 |
Required:
1. Prepare the equity method entries that Pistol should record to account for this investment in 20X6, 20X7, and 20X8. (If no entry is required for a transaction/event, select "No
1. Record the purchase of Scope Company.
2. Record the dividend from Scope Company for 20X6.
3. Record the equity-method income/loss for 20X6.
4. Record the amortization of the differential value for 20X6.
5.Record the dividend from Scope Company for 20X7.
6. Record the equity-method income/loss for 20X7.
7.Record the amortization of the differential value for 20X7.
8. Record the dividend from Scope Company for 20X8.
9.Record the equity-method income/loss for 20X8.
10. Record the amortization of the differential value for 20X8.
2. What is the balance of the Investment in Scope account on Pistol's
balance of investment account:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
