On January 1, 2024, Spark Corporation acquired a 40% interest in Cranston Incorporated for $250,000. On that date, Cranston's balance sheet disclosed net assets of $430,000. During 2024, Cranston reported net income of $100,000 andpaid cash dividends of $30,000. Spark sold inventory costing $40,000 to Cranston during 2024 for $50,000. Cranston used all of this merchandise in its operations during 2024. Any excess cost over fair value is attributable to an unamortizedtrademark with a 20-year remaining life. Prepare all of Spark's journal entries for 2024 to apply the equity method to this investment.

When the ownership percentage in other company is between 20% to 50%, then equity method of…

Answered: Prepare all of Spark's journal entries…

Business

Accounting

Prepare all of Spark's journal entries for 2024 to apply the equity method to this investment.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2024, Spark Corporation acquired a 40% interest in Cranston Incorporated for $250,000. On that date, Cranston's balance sheet disclosed net assets of $430,000. During 2024, Cranston reported net income of $100,000 and
paid cash dividends of $30,000. Spark sold inventory costing $40,000 to Cranston during 2024 for $50,000. Cranston used all of this merchandise in its operations during 2024. Any excess cost over fair value is attributable to an unamortized
trademark with a 20-year remaining life. Prepare all of Spark's journal entries for 2024 to apply the equity method to this investment.

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