Help please.
Janum; I I um _un.n n In...\" sync-u. .r '14, JW Total $9,984,163 $9,984,160 $5,523,363 $5,523,339 As of December 31, 20X8, Sword had declared but not yet paid its fourthquarter dividend of $5,000. Both companies use straightline depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword. Required: a. Compute the amount ofthe differential as of January 1, 20KB. 9 Answer is complete and correct. 35 120,000 a b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. 6 Answer is complete but not entirely correct. Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20:6, for $2,160,000. At the date ofacquisition, Sword reported common stock with a parvalue of $920,000, additional paid-in capital of $1,270,000, and retained earnings of $530,000. The fair value of the noncontrolling interest at acquisition was $720,000. The differential at acquisition was attributable to the following items: Inventory [sold in 20x2) 5 40,000 Land 56,000 Goodwill 64,000 Total Differential $160,000 ' During 20x2, Prince sold a plot of land that it had purchased several years before to Sword ata gain of$22,400; Sword continues to hold the land. In 20KB, Prince and Sword entered into a ve-year contract under which Prince provides management consulting services to Sword on a continuing basis; Sword pays Prince a fixed fee of $88,000 per year for these services. At December 31, 20KB, Sword owed Prince $22,000 as the final 20X8 quarterly payment under the contract. On January 2, 20KB, Prince paid $260,000 to Sword to purchase equipment that Sword was then carrying at $300,000. Sword had purchased that equipment on December 27, 20x2, for $450,000. The equipment is expected to have a total 15year life and no salvage value. The amount ofthe differential assigned to goodwill has not been impaired. At December 31, 20KB, trial balances for Prince and Sword appeared as follows: Prince Corporation Sword Distributors Inc. Item Debit Credit Debit Credit Cash 5 59,700 $ 47,000 Current Receivables 113,300 101,400 Inventory 290,000 230,900 Investment in Sword Distributors 2,836,600 Land 411,666 1,216,000 Buildings 8. Equipment 2,480,000 3,180,000 Cost of Goods Sold 2,175,000 521,000 Depreciation S Amortization 196,000 70,000 Other Expenses 1,380,000 211,000 Dividends Declared 42,000 12,000 Accumulated Depreciation $1,099,000 5 403,000 Current Pay-ables 91,200 528,300 Bonds Payable 805,000 188,000 Common Stock 81,000 920,000 Additional Paidin Capital 1,265,000 1,270,000 Retained Earnings, January 1 1,464,300 1,320,000 Sales 4,937,600 994,000 Other Income or Loss 95,000 34,000 Income from Sword Distributors 145,500 Total $9,984,100 $9,984,100 $5,623,300 $5,623,300
