Knox Corporation purchased 60 percent of Conway Company ownership on January 1, 20X7, for $280,500 Conway reported the following net income and dividend payments: Net Dividends ncome Paid Year 20X7 20X8 20X9 $ 53,000 $ 33,000 63,000 43,000 8,000 8,000 On January 1, 20X7, Conway had $253,000 of $9 par value common stock outstanding and retained earnings of $153,000, and the fair value of the noncontrolling interest was $187,000. Conway held land with a book value of $28,500 and a market value of $36,000 and equipment with a book value of $322,000 and a market value of $362,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Conway at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Conway. Increase in fair value b. Prepare the consolidation entries needed at January 1, 20X7, to prepare a consolidated balance sheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 2 Record the basic consolidation entry. Note: Enter debits before credits Event Accounts Debit Credit Record entry Clear entry view consolidation entries b. Prepare the consolidation entries needed at January 1, 20X7, to prepare a consolidated balance sheet. (If no entry is required for a transactionlevent, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 2 Record the excess value (differential) reclassification entry. Note: Enter debits before credits. Event Accounts Debit Credit 2 Record entry Clear entry view consolidation entries c. Compute the balance reported by Knox as its investment in Conway at December 31, 20X8. Investment in Conway d. Prepare the journal entries recorded by Knox with regard to its investment in Conway during 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record Knox Corp.'s 60% share of Conway Corp.'s 20X9 income. Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal d. Prepare the journal entries recorded by Knox with regard to its investment in Conway during 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list ournal entry worksheet 2 3 Record Knox Corp.'s 60% share of Conway Corp.'s 20X9 dividend. Note: Enter debits before credits. Event General Journal Debit Credit 2 Record entry Clear entry View general journal d. Prepare the journal entries recorded by Knox with regard to its investment in Conway during 20X9. (If no entry is required for a transaction/event, slect "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record Knox Corp's 60% share of the amortization of the excess acquisition price. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal e. Prepare the consolidation entries needed at December 31, 20X9, to prepare a three-part consolidation worksheet. (If no entry is required for a transactionlevent, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 2 3 Record the basic consolidation entry Note: Enter debits before credits. Event Accounts Debit Credit e. Prepare the consolidation entries needed at December 31, 20X9, to prepare a three-part consolidation worksheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidatiorn Worksheet Entries 2 3 Record the amortized excess value reclassification entry. Note: Enter debits before credits. Event Accounts Debit Credit 2 e. Prepare the consolidation entries needed at December 31, 20X9, to prepare a three-part consolidation worksheet. (lf no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 2 3 Record the excess value (differential) reclassification entry. Note: Enter debits before credits. Event Accounts Debit Credit
