Pop Corporation purchased 480,000 shares of Son Corporation's common stock (an 80 percent interest) for $10,600,000 on January 1, 2016. The $1,000,000 excess of investment fair value over book value acquired was attributed to goodwill.
On January 1, 2018, Son sold 200,000 previously unissued shares of common stock to the public for $30 per share. Son's stockholders' equity on January 1, 2016, when Pop acquired its interest, and on January 1, 2018, immediately before and after the issuance of additional shares, was as follows (in thousands):

REQUIRED
1. Calculate the balance of Pop's Investment in Son account on January 1, 2018, before the additional stock issuance.
2. Determine Pop's percentage interest in Son on January 1, 2018, immediately after the additional stock issuance.
3. Prepare a journal entry on Pop's books to adjust for the additional share issuance on January 1, 2018, if gain or loss is not recognized.

Transcribed Image Text:

January 1, 2018January 1, 2018 Before Issuanc January 1, 2016 After Issuance Common stock, $10 par Other paid-in capital Retained earnings S 6,000 2,000 4,000 $12.000 $6,000 2,000 5,000 $13,000 $ 8,000 6,000 5,000 $19,000 Total