Question
Patriot Corporation acquired 75% ownership of Seahawk Corporation on January 1, 20X8, for $300,000. The fair value of the noncontrolling interest was $100,000. At that
Patriot Corporation acquired 75% ownership of Seahawk Corporation on January 1, 20X8, for $300,000. The fair value of the noncontrolling interest was $100,000. At that date, Seahawk reported common stock outstanding of $100,000 and retained earnings of $180,000. The differential is assigned to equipment, which had a fair value $50,000 greater than book value and a remaining economic life of 5 years at the date of the business combination. The remaining excess is considered goodwill. Seahawk reported net income of $40,000 and paid dividends of $20,000 in 20X8
- What is the amount of goodwill?
- Provide the journal entries recorded by Patriot during 20X8 on its books if it accounts for its investment in Seahawk using the equity method.
- Give the consolidating entries needed at December 31, 20X8, to prepare consolidated financial statements.
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