Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20X1, for $2,160,000. At the date of acquisition, Sword reported common stock with a par value of $920,000, additional paid-in capital of $1,270,000, and retained earnings of $530,000. The fair value of the noncontrolling interest at acquisition was $720,000. The differential at acquisition was attributable to the following items: ook Inventory (sold in 20x2) Land Goodwill Total Differential $ 40,000 56,000 64,000 $160,000 sk ences During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $22,400; Sword continues to hold the land. In 20X6, Prince and Sword entered into a five-year contract under which Prince provides management consulting services to Sword on a continuing basis; Sword pays Prince a fixed fee of $94,000 per year for these services. At December 31, 20X8, Sword owed Prince $23,500 as the final 20X8 quarterly payment under the contract. On January 2, 20X8, Prince paid $260,000 to Sword to purchase equipment that Sword was then carrying at $300,000. Sword had purchased that equipment on December 27, 20X2, for $450,000. The equipment is expected to have a total 15-year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired. At December 31, 20X8, trial balances for Prince and Sword appeared as follows: Check my work Credit 1 S 55,000 96,400 220,900 3.33 pints S 67,700 108,800 306,000 2,808, 100 406,000 2,490,000 2,176,000 183,000 1,364,000 48,000 1, 215,000 3,080,000 524,000 84,000 222,000 18,000 eBook Cash Current Receivables Inventory Investment in Sword Distributors Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Common stock Additional Paid-in Capital Retained Earnings, January 1 Sales Other Income or Loss Income from Sword Distributors Total Ask $1,091,000 87,200 903,000 92,000 1,261,000 1,456,800 4,852, 100 93,000 121,500 $9,957,600 S 413,000 451,300 185,000 920,000 1,270,000 1,320,000 989,000 References 33,000 $9,957,600 $5,548,300 $5,548,300 As of December 31, 20X8, Sword had declared but not yet paid its fourth-quarter dividend of $5,000. Both companies use straight- line depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword. Required: ic Answer is complete and correct. Remaining differential $ 120,000 b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. Answer is complete but not entirely correct. Balance in Investment in Sword Account $ 2,803,500 X
