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All of the parts of the question have been provided. Harper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January
All of the parts of the question have been provided.
Harper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2020, for $365,700 in cash. The book value of Kinman's net assets on that date was $760,000, although one of the company's buildings, with a $71,200 carrying amount, was actually worth $111,450. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $114,000. Kinman sold inventory with an original cost of $65,100 to Harper during 2020 at a price of $93,000. Harper still held $22,800 (transfer price) of this amount in inventory as of December 31, 2020. These goods are to be sold to outside parties during 2021. Kinman reported a $43,600 net loss and a $27,500 other comprehensive loss for 2020 . The company still manages to declare and pay a $5,000 cash dividend during the year. During 2021, Kinman reported a $56,400 net income and declared and paid a cash dividend of $7,000. It made additional inventory sales of $74,000 to Harper during the period. The original cost of the merchandise was $46,250. All but 30 percent of this inventory had been resold to outside parties by the end of the 2021 fiscal year. Prepare all journal entries for Harper for 2020 and 2021 in connection with this investment. Assume that the equity method is applied. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Journal entry worksheet Journal entry worksheet Note: tnter debits betore credits. Journal entry worksheet Note: Enter debits before credits. Journal entry worksheet Note: Enter debits before credits. Journal entry worksheet 1 67 Record the accrual of income and OCI from equity investee. Note: Enter debits before credits. Journal entry worksheet 1 7 Record the amortization relating to acquisition of Kinman. Note: Enter debits before credits. Journal entry worksheet 1 8 Record the deferred unrealized gross profit on intra-entity sale. Note: Enter debits before credits. Journal entry worksheet Ivote: tnter aedits Derore creas. Journal entry worksheet Note: Enter debits before credits. Journal entry worksheet 145678 Record the 40% accrual of income as earned by equity investee. Note: Enter debits before credits. Journal entry worksheet 1 6 7 8 9 Record the amortization relating to acquisition of Kinman. Note: Enter debits before credits. Journal entry worksheet Note: Enter debits before credits. Journal entry worksheet 1578910 Record the deferred unrealized gross profit on intra-entity sale. Note: Enter debits before credits
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