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On January 1, 2020, Palka, Inc., acquirod 70 percent of the outstanding shares of Sellinger Company for $1488,900 in cash. The price paid was proportionate to Sellinger's total fair value, although at the acquisition date, Sellinger had a total book value of $1,880,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life that was undervalued on Sellinger's accounting records by $237000. On January 2021, Palka acquired an additional 25 percent common stock equity interest in Selinger Company for $587.500 in cash On its internal records, Palka uses the equity method to account for its shares of Sellinger, During the two years following the acquisition, Sellinger reported the following net income and dividends 2020 2021 Net income $502,500 $644,500 Dividends declared 160,000 190,000 a. Show Palka's journal entry to record its January 1, 2021, acquisition of an additional 25 percent ownership of b. Prepare a schedule showing Polka's December 31, 2021, equity method balance for its Investment in Selinger account Complete this question by entering your answers in the tabs below. Required Required A Show Palka's journal entry to record its January 1, 2021, acquisition of an additional 25 percent ownership of Sellinger Company shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less View transaction list Journal entry worksheet Record the acquisition of an additional 25 percent ownership of Sellinger Company shares. Note: Enter debits before credits. General Journal Debit Credit Date January 01, 2021 Record entry View general journal Clear entry On January 1, 2020, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,488,900 in cash. The price paid was proportionate to Sellinger's total fair value, although at the acquisition date, Sellinger had a total book value of $1,880,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger's accounting records by $237,000. On January 1, 2021. Palka acquired an additional 25 percent common stock equity interest in Selinger Company for $587,500 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Selinger reported the following net income and dividends: 2020 2021 Net income $502,500 $644,500 Dividends declared 160,000 190,000 a. Show Palka's journal entry to record its January 1, 2021, acquisition of an additional 25 percent ownership of Sellinger Company shares. b. Prepare a schedule showing Palka's December 31, 2021, equity method balance for its Investment in Sellinger account Complete this question by entering your answers in the tabs below. Required Required A B Prepare a schedule showing Palka's December 31, 2021, equity method balance for its Investment in Sellinger account. (Amounts to be deducted should be indicated with a minus sign.) Initial value for acquisition Adjusted subsidiary net income 2020 Subsidiary dividends 2020 Adjusted fair value of newly acquired shares Adjusted subsidiary 2021 net income Subsidiary dividends 2021 Investment in Sellinger 12/31/21 $ 0
