On January $1,20$X$1,$ Hawkins Corporation issued $3,300$ shares of its $$10$ par value

common stock to acquire $22\%(6,600)$ of the shares of Ameen Manufacturing. The

balance sheet of Ameen Manufacturing immediately before the acquisition contained the

following items:

Ameen Manufacturing

Balance Sheet

January $1,20$X$1$

Assets

Cash and Receivables $ $30,000$

Land $70,000$

Buildings and Equipment $($net$)120,000$

Patent $80,000$

Total Assets $$300,000$

Liabilities and Equities

Accounts Payable $ $90,000$

Common Stock $150,000$

Retained Earnings $60,000$

Total Liabilities and Equities $$300,000$

On the date of the acquisition, Hawkins Corporation shares were selling at $$32,$ and the

book value and fair value of Ameen$$s net assets were equal.

For the year ended December $31,20$X$1,$ Ameen Manufacturing reported net income of

$$90,000$ and paid dividends of $$20,000.$ The fair value of Ameen$$s stock on December

$31,20$X$1$ was $$15$ a share.

Instructions:

A$.$ Prepare the journal entries $($if any$)$ to record the following by Hawkins Corporation

using $(1)$ the fair value method and $(2)$ the equity method:

$1.$ Acquisition of stock

$2.$ Receipt of Ameen dividends

$3.$ Net income reported by Ameen

$4.$ Adjustment of investment to fair value

B$.$What is the reported amount of the investment on Hawkins$$ balance sheet at $12/31/$X$1$

assuming: $($a$)$ no influence and $($b$)$ significant influence?

C$.$ Work this problem again, this time assuming that Hawkins purchased the stock of

Ameen on November $1,20$X$1.$Investment in Stock

On January $1,20$X$1,$ Hawkins Corporation issued $3,300$ shares of its $$10$ par value

common stock to acquire $22\%(6,600)$ of the shares of Ameen Manufacturing. The

balance sheet of Ameen Manufacturing immediately before the acquisition contained the

following items:

Ameen Manufacturing

Balance Sheet

January $1,201$

Assets

Cash and Receivables

Land

Buildings and Equipment $($net$)$

Patent

Total Assets

Liabilities and Equities

On the date of the acquisition, Hawkins Corporation shares were selling at $$32,$ and the

book value and fair value of Ameen's net assets were equal.

For the year ended December $31,20$X$1,$ Ameen Manufacturing reported net income of

$$90,000$ and paid dividends of $$20,000.$ The fair value of Ameen's stock on December

$31,20x1$ was $$15$ a share.

Instructions:

A$.$ Prepare the journal entries $($if any$)$ to record the following by Hawkins Corporation

using $(1)$ the fair value method and $(2)$ the equity method:

Acquisition of stock

Receipt of Ameen dividends

Net income reported by Ameen

Adjustment of investment to fair value

B$.$ What is the reported amount of the investment on Hawkins' balance sheet at $12/31/$X$1$

assuming: $($a$)$ no influence and $($b$)$ significant influence?

C$.$ Work this problem again, this time assuming that Hawkins purchased the stock of

Ameen on November $1,20$X$1.$