P5-22 Amortization of Differential LO 5-1 Pawn Corporation purchased 30 percent of Shop Company's common stock on January 1, 20X5, by issuing preferred stock with a par value of $50,000 and a market price of $120,000. The following amounts relate to Shop's balance sheet items at that date: Book Value Fair Value $200,000 Assots Cash & Receivables Buildings & Equipment Less: Accumulated Depreciation Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock $ 200,000 400,000 (100,000) $ 500,000 Retained Earnings Total Liabilities & Equities 360,000 $ 50,000 200,000 100,000 150,000 50,000 200,000 $ 500,000 Shop purchased buildings and equipment on January 1, 20X0, with an expected economic life of 20 years. No change in overall expected economic life occurred as a result of the acquisition of Pawn's stock. The amount paid in excess of the fair value of Shop's reported net assets is attributed to unrecorded copyrights with a remaining useful life of eight years. During 20X5, Shop reported net Income of $40,000 and paid dividends of $10,000. Required: Prepare all journal entries to be recorded on Pawn Corporation's books during 20X5, assuming it uses the equity method in accounting for its ownership of Shop Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list