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Power Corporation acquired 100 percent ownership of Upland Products Company on January 1, 20X1, for $200,000. On that date, Upland reported retained earnings of $50,000
Power Corporation acquired 100 percent ownership of Upland Products Company on January 1, 20X1, for $200,000. On that date, Upland reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Power has used the equity method in accounting for its investment in Upland. The trial balances for the two companies on December 31, 20X5, appear below. Power Corporation Upland Products Company Item Debit Credit Debit Credit Cash & Receivables $ 43,000 $ 65,000 Inventory 260,000 90,000 Land 80,000 80,000 Buildings & Equipment 500,000 150,000 Investment in Upland Products Stock 235,000 Cost of Goods Sold 120,000 50,000 Depreciation Expense 25,000 15,000 Inventory Losses 15,000 5,000 Dividends Declared 30,000 10,000 Accumulated Depreciation $ 205,000 $ 105,000 Accounts Payable 60,000 20,000 Notes Payable 200,000 50,000 Common Stock 300,000 100,000 Retained Earnings 318,000 90,000 Sales 200,000 100,000 Income from Subsidiary 25,000 $ 1,308,000 $ 1,308,000 $ 465,000 $ 465,000 Additional Information: 1. On the date of combination (five years ago), the fair value of Uplands depreciable assets was $50,000 more than the book value. Accumulated depreciation at that date was $10,000. The differential assigned to depreciable assets should be written off over the following 10-year period. 2. There was $10,000 of intercorporate receivables and payables at the end of 20X5. Required: a. Prepare all journal entries that Power recorded during 20X5 related to its investment in Upland. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Power Corporation acquired 100 percent ownership of Upland Products Company on January 1, 20X1, for $200,000. On that date, Upland reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Power has used the equity method in accounting for its investment in Upland.
The trial balances for the two companies on December 31, 20X5, appear below.
Power
Corporation Upland
Products Company
Item Debit Credit Debit Credit
Cash & Receivables $ 43,000 $ 65,000
Inventory 260,000 90,000
Land 80,000 80,000
Buildings & Equipment 500,000 150,000
Investment in Upland Products Stock 235,000
Cost of Goods Sold 120,000 50,000
Depreciation Expense 25,000 15,000
Inventory Losses 15,000 5,000
Dividends Declared 30,000 10,000
Accumulated Depreciation $ 205,000 $ 105,000
Accounts Payable 60,000 20,000
Notes Payable 200,000 50,000
Common Stock 300,000 100,000
Retained Earnings 318,000 90,000
Sales 200,000 100,000
Income from Subsidiary 25,000
$ 1,308,000 $ 1,308,000 $ 465,000 $ 465,000
Additional Information:
1.
On the date of combination (five years ago), the fair value of Uplands depreciable assets was $50,000 more than the book value. Accumulated depreciation at that date was $10,000. The differential assigned to depreciable assets should be written off over the following 10-year period.
2. There was $10,000 of intercorporate receivables and payables at the end of 20X5.
Required:
a.
Prepare all journal entries that Power recorded during 20X5 related to its investment in Upland. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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