Financial Accounting Question please answer Sells Corporation acquired 45 percent of the common shares of Peat Companyon January 1, 2010, for $1,125,000 in cash. On this date, the net book value ofPeat was $2,000,000. The excess of the purchase consideration over the netbook value was attributable to a patent with a remaining useful life of tenyears. For the year ending December 31, 2010, Peat reported a net income of$141,000 and they paid dividends of $23,000.Required:Prepare the journal entries to record the investment by Sells Corporation inPeat Company for 2010.

Step 1: Define InvestmentEvery business organization operates to earn profit by generating revenue…

Answered: Sells Corporation acquired 45 percent…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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On January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $293,600. Excess patent cost amortization of $12,000 is still being recognized each year. During 2018, Seacrest reports net income of $342,000 and a $120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 8,000 shares of Seacrest on August 1, 2018, for $93,000 in cash. However, Pine retains the ability to significantly influence the investee. During the last quarter of 2017, Pine sold $50,000 in inventory (which it had originally purchased for only $30,000) to Seacrest. At the end of that fiscal year, Seacrest’s inventory retained $10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of…
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