On July 1, 2018, Clearwater Inc. purchased 6,000 shares of the outstanding common stock of

Mountain Corporation at a cost of $140,000. Clearwater will have significant influence over the

financial and operating policies of Mountain. Mountain had 30,000 shares of outstanding common

stock. Assume the total book value and fair value of net assets is $650,000. Both companies have a

January through December fiscal year. The following data pertains to Mountain Corporation during

2018:

Dividends declared and paid, Jan. 1-June 30 $12,000

Dividends declared and paid, Jul. 1-Dec. 31 $12,000

Net Income, January 1-June 30 $14,000

Net Income, July 1-December 31 $18,000

Required:

(1.) Prepare the entry to record the original investment in Mountain.

(2.) Compute the goodwill (if any) on the acquisition.

(3.) Prepare the necessary entries (other than acquisition) for 2018 under the equity method