On January 1, 2020, Commerce Crusaders purchased 2,500 of the 10,000 outstanding common shares of Snowmageddon Limited at a cost of $15 per share. On that date, the balance sheet of Snowmageddon Limited had the following relevant values: Fair Book Market Differenc Account Value Value Current assets $12,000 $0 $12,000 $128,00 0 $88,000 $40,000 Depreciable capital assets net of accumulated depreciation Goodwill $0 $100,00 ?? ?? Total Liabilities Common shares Retained earnings $50,000 $20,000 $30,000 $100,00 0 $50,000 $20,000 ?? $0 Total Additional information: The depreciable capital assets have a remaining useful life of 10 years. During the 2020 fiscal year, Snowmageddon Limited had net income of $45,000. During the year, Commerce sold to Snowmageddon inventory with a selling price of $20,000 and a cost of $12,000. The inventory had not been resold by year-end. During the 2020 fiscal year, Snowmageddon Limited paid total cash dividends to its common shareholders of $10,000 ($1.00 per share). Market value per share of Snowmageddon Limited at December 31, 2020 was $18. Required: a) You are to assume that Commerce Crusaders can exercise significant influence over Snowmageddon Limited and uses the equity method to account for its investment. Calculate Commerce's goodwill on purchase of its investment in Snowmageddon. Prepare all necessary journal entries for Commerce Crusaders for the year ended December 31. On January 1, 2020, Commerce Crusaders purchased 2,500 of the 10,000 outstanding common shares of Snowmageddon Limited at a cost of $15 per share. On that date, the balance sheet of Snowmageddon Limited had the following relevant values: Fair Book Market Differenc Account Value Value Current assets $12,000 $0 $12,000 $128,00 0 $88,000 $40,000 Depreciable capital assets net of accumulated depreciation Goodwill $0 $100,00 ?? ?? Total Liabilities Common shares Retained earnings $50,000 $20,000 $30,000 $100,00 0 $50,000 $20,000 ?? $0 Total Additional information: The depreciable capital assets have a remaining useful life of 10 years. During the 2020 fiscal year, Snowmageddon Limited had net income of $45,000. During the year, Commerce sold to Snowmageddon inventory with a selling price of $20,000 and a cost of $12,000. The inventory had not been resold by year-end. During the 2020 fiscal year, Snowmageddon Limited paid total cash dividends to its common shareholders of $10,000 ($1.00 per share). Market value per share of Snowmageddon Limited at December 31, 2020 was $18. Required: a) You are to assume that Commerce Crusaders can exercise significant influence over Snowmageddon Limited and uses the equity method to account for its investment. Calculate Commerce's goodwill on purchase of its investment in Snowmageddon. Prepare all necessary journal entries for Commerce Crusaders for the year ended December 31
