Part IV. Changes in Ownership Interest

The balance of Pauley Corporations Investment in Savage Company account at January 1, 2016 was $436,000, consisting of 80% of Savages $500,000 of book value on that date and an unamortized balance of $36,000 allocated to equipment with a remaining life of three years. During 2016, Savage Company reported net income of $150,000 and, on July 1, 2016 , declared and paid dividends of $80,000.

Required:

Prepare necessary journal entries to record each of the following independent transactions. You may assume that any price paid or received is proportionate to the total fair value of Savage and that income is earned evenly throughout the year. Show your reporting calculations.

AOn May 1, 2016, Pauley sold a 20% interest in Savage (1/4 of its holdings) for $130,000

BOn May 1, 2016, Pauley sold a 40% interest in Savage (1/2 of its holdings) for $260,000

COn May 1, 2016, Pauley purchased an additional 10% interest in Savage for $65,000.