Question
Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021: On January 1, 2021, Peregrine acquired all of Spranos
Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021:
On January 1, 2021, Peregrine acquired all of Spranos outstanding stock for $680,000 fair value in cash and common stock. At the date of acquisition, copyrights (with a 6-year remaining life) were undervalued by $120,000 (i.e., market value was higher than book value). Peregrine applies the equity method to maintain the Investment in Sprano account.
For the year ending December 31, 2021 determined the total Equity Income in Sprano reported in Peregrines book.
Sprano $ (400,000) 100,000 200,000 Revenues Cost of goods sold Depreciation expense Equity Income in Sprano Retained earnings, 1/1/21 Dividends declared Current assets Copyrights Royalty agreements Investment in Sprano Liabilities Common Stock ($20 par) Additional paid-in capital Peregrine $ (700,000) 250,000 150,000 ??? (600,000) 80,000 400,000 900,000 600,000 ??? (950,000) (600,000) (150,000) (200,000) 60,000 500,000 400,000 1,000,000 (1,380,000) (200,000) (80,000)Step by Step Solution
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