Question
FE19 please help for my assignment On December 31, 2018, Colin Corp Company purchased 25% of the shares of Darryl Inc. for $2,300,000. This provided
FE19 please help for my assignment
On December 31, 2018, Colin Corp Company purchased 25% of the shares of Darryl Inc. for $2,300,000.
This provided Colin Corp with significant influence over Darryl.
On this date, Darryl had common shares of $2,000,000 and retained earnings of $2,500,000. All assets and liabilities of Darryl were equal to their fair values with the following exceptions:
Item Carrying value Fair value Years remaining
Inventory $ 250,000 $ 260,000 1
Land 600,000 800,000
Buildings 1,300,000 1,600,000 15
Long-term liabilities 2,000,000 2,150,000 3
The net income and dividends declared by Darryl in 2019 and 2020 were as follows:
2019 2020
Net income $ 800,000 $ 950,000
Dividends 200,000 200,000
Darryl' retained earnings balance at December 31, 2020, was $3,850,000. None of Darryl' land was sold in the three years after acquisition.
Required:
a) Determine the allocation of the acquisition differential on the date of acquisition on December 31, 2020
b) Calculate the investment income in Darryl for the years 2019 and 2020, and prepare all journal entries that Colin would record relative to its investment in Darryl for the 2019 and 2020 years.
c) Calculate the balance in the Investment in Darryl account at December 31, 2020
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