Question
Fizer Pharmaceutical paid $87 million on January 2, 2024, for 7 million shares of Carne Cosmetics common stock. The investment represents a 25% interest in
Fizer Pharmaceutical paid $87 million on January 2, 2024, for 7 million shares of Carne Cosmetics common stock. The investment represents a 25% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carnes operations. Fizer received dividends of $1 per share on December 21, 2024, and Carne reported net income of $60 million for the year ended December 31, 2024. The fair value of Carnes common stock at December 31, 2024, was $37.50 per share.
- The book value of Carne's net assets was $152 million.
- The fair value of Carne's depreciable assets exceeded their book value by $40 million. These assets had an average remaining useful life of ten years.
- The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.
Required:
1a. Complete the table below and prepare the appropriate journal entries related to the investment during 2024.
1b. Prepare the appropriate journal entries related to the investment during 2024.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).
Journal entries:
- Record the investment in Carne Cosmetics shares.
- Record the investor's share of net income.
- Record the cash dividends.
- Record the depreciation adjustment.
- Record the fair value adjustment
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