On January 2, 2014, Best Beverages acquired 45 percent of the stock of Better Bottlers for \($30\) million in cash. Best Beverages accounts for its investment using the equity method. At the time of acquisition, Better Bottlers’ balance sheet was as follows (in millions):

Valuation of Better Bottlers’ assets and liabilities revealed that its reported patents and trademarks (10-year life) had a fair value of \($160\) million and it had unrecognized brand names (15-year life) worth \($9\) million. Better Bottlers’ December 31, 2017, retained earnings balance is \($25\) million. For 2017, it reported net income of \($2.5\) million and paid \($650,000\) in dividends.

Required

a. Prepare the 2017 entries to report the above information on Best Beverages’ books.

b. Calculate the Investment in Better Bottlers balance, reported on Best Beverages’ December 31, 2017, balance sheet.

Transcribed Image Text:

Assets Current assets..... Better Bottlers Balance Sheet, January 2, 2014 Property and equipment, net. Patents and trademarks.. Total assets Liabilities and equity Current liabilities. Long-term debt Total liabilities. Capital stock Retained earnings Total equity.... Total liabilities and equity.. $ 20 415 150 $585 $ 42 518 560 12 13 25 $585