Question
Please do the exercise step by step and be clear. Thank you. Gold Corporation paid $800,000 on January 1, 2021 for a 50% interest in
Please do the exercise step by step and be clear. Thank you.
Gold Corporation paid $800,000 on January 1, 2021 for a 50% interest in Santurce Inc. On January 1, 2020, the book value of Techno's stockholders' equity consisted of $450,000 of common stock and $440,000 of retained earnings. All the excess purchase cost over book value acquired was attributable:
- 35% equipment (overvalue) with an estimated life of 10-years.
- 15% a building (undervalue) with an estimated life of 15-years.
- 50% remainder for goodwill
Gold's Corporation used the equity method. Information of dividends and net income for 2021 of Techno Inc. is presented below.
Using the working paper:
1. Present the analysis of combination and prepare the journal entries for acquired investment, received dividends, received net income and amortization of equipment and building
2. Calculate the Sanjuanas income from Santurce Inc. for 2021.
3. Determine the balance of Gold's Investment in Techno Inc. account on December 31, 2021.
4. Assume that Gold's net income for 2021 consists of $1,000,000 sales and expenses for $712,000 and its investment income from Techno Inc. Prepare the Income Statement for Gold's Corporation for December 31, 2021.
June 30, 2021 - dividend Sep 30, 2021 - dividend Dec 31, 2021 - dividend Dec 31, 2021 - net income $20,000 $25,000 $35,000 $900,000 - June 30, 2021 - dividend Sep 30, 2021 - dividend Dec 31, 2021 - dividend Dec 31, 2021 - net income $20,000 $25,000 $35,000 $900,000Step by Step Solution
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