Question
On January 1, 2019, Franklin Company acquires 80% of the outstanding common stock of Jefferson, for a purchase price of $1,100,000. It was determined that
On January 1, 2019, Franklin Company acquires 80% of the outstanding common stock of Jefferson, for a purchase price of $1,100,000. It was determined that the fair value of the noncontrolling interest in the subsidiary is $250,000. The book value of the Jefferson's stockholders' equity on the date of acquisition is $800,000. The acquisition-date acquisition accounting premium (AAP) is allocated $250,000 to equipment with a remaining useful life of 10 years; $150,000 to a patent with a remaining useful life of 6 years, and the remainder (if any) to Goodwill.
Assume that during the year ended December 31, 2019, Jefferson reports net income of $450,000 and pays dividends of $40,000. Franklin uses the equity method to account for its investment in Jefferson.
Assuming consolidation on the acquisition date, what is the [A] consolidating journal entry?
Dr. Equipment250,000
Dr. Patent150,000
Dr. Goodwill150,000
Cr. Equity Investment460,000
Cr. NCI90,000
None of the answer choices is correct.
Dr. Equipment250,000
Dr. Patent150,000
Dr. Goodwill175,000
Cr. Equity Investment490,000
Cr. NCI85,000
Dr. Equipment250,000
Dr. Patent150,000
Dr. Goodwill150,000
Cr. Equity Investment440,000
Cr. NCI110,000
Dr. Equipment250,000
Dr. Patent150,000
Dr. Goodwill175,000
Cr. Equity Investment460,000
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College Accounting Chapters 1-15
Authors: James A Heintz, Robert W Parry
19th Edition
0324376162, 978-0324376166
