Spancrete Corporation acquires a 30% interest in the outstanding stock of Werl Corporation on January 1, 2015.

Question:

Spancrete Corporation acquires a 30% interest in the outstanding stock of Werl Corporation on January 1, 2015. At that time, the following determination and distribution of excess schedule is prepared:

Spancrete Corporation acquires a 30% interest in the outstanding stock

During 2015, Spancrete purchases $200,000 of goods from Werl. $20,000 of these purchases is in the December 31, 2015, ending inventory. During 2016, Spancrete purchases $250,000 of goods from Werl. $30,000 of these purchases is in the December 31, 2016, ending inventory.
Werl’s gross profit rate is 30%. Also, Spancrete purchases a machine from Werl for $15,000 on January 1, 2016. The machine has a book value of $10,000 and a 5-year remaining life. Werl reports net income of $90,000 and pays $20,000 on dividends during 2016.
Required
Prepare an income distribution schedule for Werl, and record the entries to adjust the investment in Werl for 2016 using the equity method.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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...
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Advanced Accounting

ISBN: 978-0538480284

11th edition

Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng

Question Posted: