*Advanced Accounting

Question 2: (10 marks) (B1, C3) Part A: (5 marks) On March 1, 2016, X Corporation acquired all the outstanding common stock of Y Company for $850,000. On that date, the carrying amount of Y's identifiable net assets was $750,000. The difference of $100,000 was allocated as follows: Inventories (first-in, first-out cost) $ 10,000 Plant assets (net) (economic life 8 years) 60,000 Goodwill 30,000 Total $100.000 Y had a net income of $110,000 and declared dividends of $75,000 for the fiscal year ended February 28, 2017. Y uses straight-line depreciation for plant assets. Goodwill was one-twentieth impaired on February 28, 2017 Instructions: Compute the following for X Corporation using the equity method of accounting (disregard income taxes) on February 28, 2017: 1. Balance of Intercompany Investment Income ledger account. (3 marks) 2. Balance of Investment in Y Company Common Stock ledger account. (2 marks)