Amber Corporation reported the following summarized balance sheet data on December 31, 20X6 On January 1, 20X7, Purple Company acquired 100 percent of Ambers stock for $500,000 At the acquisition date, the book values and fair values of Ambers assets and liabilities were equal Amber reported net in...

a Equity Method Entries on Purple Cos Books b Book Value Calculations Inve ...

Amber Corporation reported the following summarized balance sheet data on December 31, 20X6: On January 1, 20X7,

Question:

Amber Corporation reported the following summarized balance sheet data on December 31, 20X6:

On January 1, 20X7, Purple Company acquired 100 percent of Amberâ€™s stock for $500,000. At the acquisition date, the book values and fair values of Amberâ€™s assets and liabilities were equal. Amber reported net income of $50,000 for 20X7 and paid dividends of $20,000.

Required

a. Give the journal entries recorded by Purple on its books during 20X7 if it accounts for its investment in Amber using the equity method.

b. Give the elimination entries needed on December 31, 20X7, to prepare consolidated financial statements.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...