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On January 1, 2013, Piper Company acquired an 80% interest in Sand Company for $2,180,800. At that time the common stock and retained earnings of
On January 1, 2013, Piper Company acquired an 80% interest in Sand Company for $2,180,800. At that time the common stock and retained earnings of Sand Company were $1,863,700 and $702,700, respectively. Differences between the fair value and the book value of the identifiable assets of Sand Company were as follows:
Assume the use of the cost method. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation 2013 Debit Credit To eliminate intercompany dividends) To eliminate the investment account) (To eliminate the investment acount) (To allocate and depreciate the difference between implied and book value) 2014 (To establish reciprocity/convert to equity method as of 1/1/2011) To eliminate intercompany dividends) 2014 To establish reciprocity/convert to equity method as of 1/1/2011) To eliminate intercompany dividends) To eliminate investment account and create noncontrolling interest account) (To eliminate investment account and create noncontrolling interest account) (To allocate and depreciate the difference between implied and book value) 2015 To establish reciprocity/convert to equity method as of 1/1/2012) To eliminate intercompany dividends) 2015 (To establish reciprocity/convert to equity method as of 1/1/2012) To eliminate intercompany dividends) To eliminate investment account and create noncontrolling interest account) Assume the use of the cost method. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation 2013 Debit Credit To eliminate intercompany dividends) To eliminate the investment account) (To eliminate the investment acount) (To allocate and depreciate the difference between implied and book value) 2014 (To establish reciprocity/convert to equity method as of 1/1/2011) To eliminate intercompany dividends) 2014 To establish reciprocity/convert to equity method as of 1/1/2011) To eliminate intercompany dividends) To eliminate investment account and create noncontrolling interest account) (To eliminate investment account and create noncontrolling interest account) (To allocate and depreciate the difference between implied and book value) 2015 To establish reciprocity/convert to equity method as of 1/1/2012) To eliminate intercompany dividends) 2015 (To establish reciprocity/convert to equity method as of 1/1/2012) To eliminate intercompany dividends) To eliminate investment account and create noncontrolling interest account)Step by Step Solution
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