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On July 1, 2021, Clearwater Inc. purchased 9,500 shares of the outstanding common stock of Mountain Corporation at a cost of $195,000 Clearwater will have
On July 1, 2021, Clearwater Inc. purchased 9,500 shares of the outstanding common stock of Mountain Corporation at a cost of $195,000 Clearwater will have significant influence over the financial and operating policies of Mountain. Mountain had 38,000 share of outstanding common stock. Assume the total book value and fair value of identifiable net assets is $730,000. Both companies have a January through December fiscal year. The following data pertains to Mountain Corporation during 2021: Dividends declared and paid, January 1-June 30 Dividends declared and paid, July 1-December 31 Net income, January 1-June 30 Net income, July 1-December 31 $12,800 $ 12,800 $ 14,800 $ 18,800 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 2021 under the equity method. Required 1 Required 2 Required 3 Prepare the entry to record the original investment in Mountain. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 Record the entry for original investment in equity affiliate. Note: Enter debits before credits. Transaction General Journal Debit Credit > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the goodwill (if any) on the acquisition. Goodwill 13 Prepare the necessary entries (other than acquisition) for 2021 under the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 Record the entry for cash dividend received under the equity method. Note: Enter debits before credits. Transaction 1 General Journal Debit Credit >
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