I have seen several scenarios on Chegg such as this one: https://www.chegg.com/homework-help/questions-and-answers/prince-corporation-acquired-100-percent-sword-company-january-1-20x7-188-000-trial-balance-q34185683

However, in all of them I have yet to understand where the amount in event 2 in the journal entries recorded by Prince comes from (the investment in Sword Company a.ka. the subsidiary company, and the Income from Sword Compnay). In the answers given in the problem set of the hyperlink, it is 55,000 for each. But I don't know how that answer was arrived at.

In the same scenario I was given, it states 74,000 as income from Sword Company in the trial balance but that is not the right answer.

In another scenario, this information was provided:

In this instance, the correct answer was $83,000

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $196,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Sword Company Debit Credit $ 35,000 72,000 104,000 30,000 153,000 Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company Prince Corporation Debit Credit $ 91,000 67,000 179,000 89.000 499.000 251,000 499,000 23,000 56,000 60,000 $ 139,000 62,000 186,000 291,000 357,000 699,000 80,000 $1,814,000 $1,814,000 259,000 13,000 56,000 25,000 $ 65,000 20,000 113,000 47.000 91,000 411,000 $747,000 $747,000 Additional Information 1. On January 1, 20X7, Sword reported net assets with a book value of $138,000. A total of $25,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its investment in Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $15,000 on December 31, 20X7. Required: a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)