Question
On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,505,000 in cash and
On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,505,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $940,000, retained earnings of $490,000, and a noncontrolling interest fair value of $645,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. ** Answer in given format
During the next two years, Smashing reported the following:
Journal Entries:
1. Prepare Entry *G
2.Prepare Entry S
3Prepare Entry A
4 Prepare Entry I
5Prepare Entry D
6 Prepare Entry E
7 Prepare Entry TI
8 Prepare Entry G
On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,505,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $940,000, retained earnings of $490,000, and a noncontrolling interest fair value of $645,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following Inventory Dividends Purchases from Declared $59,000 Net Income 2017 $390,000 2018 370,000 Corgan $340,000 360,000 69,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 50 percent of the current year purchases remain in Smashing's inventory a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018. b. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing. Complete this question by entering your answers in the tabs below Required A Required B Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018 Investment balance 12/31/18Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started