Problem 22-12

On January 3, 2016, Coronado Company purchased for $498,000 cash a 10% interest in Whispering Corp. On that date, the net assets of Whispering had a book value of $3,685,000. The excess of cost over the underlying equity in net assets is attributable to undervalued depreciable assets having a remaining life of 10 years from the date of Coronados purchase.

The fair value of Coronados investment in Whispering securities is as follows: December 31, 2016, $558,000, and December 31, 2017, $514,000.

On January 2, 2018, Coronado purchased an additional 30% of Whisperings stock for $1,532,000 cash when the book value of Whisperings net assets was $4,132,000. The excess was attributable to depreciable assets having a remaining life of 8 years.

During 2016, 2017, and 2018, the following occurred.

Whispering

Net Income

Dividends Paid by

Whispering to Coronado

2016 $352,000 $15,000

2017 449,000 20,000

2018 552,000 70,000

On the books of Coronado Company, prepare all journal entries in 2016, 2017, and 2018 that relate to its investment in Whispering Corp., reflecting the data above and a change from the fair value method to the equity method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

CALCULATOR PRINTER VERSION BACK NEXT Problem 22-12 On January 3, 2016, Coronado Company purchased for $498,000 cash a 10% interest in Whispering Corp. On that date, the net assets of Whispering had a book value of $3,685,000. The excess of cost over the underlying equity in net assets is attributable to undervalued depreciable assets having a remaining life of 10 years from the date of Coronado's purchase. The fair value of Coronado's investment in Whispering securities is as follows: December 31, 2016, $558,000, and December 31, 2017, $514,000. On January 2, 2018, Coronado purchased an additional 30% of Whispering's stock for $1,532,000 cash when the book value of Whispering's net assets was $4,132,000. The excess was attributable to depreciable assets having a remaining life of 8 years. During 2016, 2017, and 2018, the following occurred. 2016 2017 2018 Whispering Net Income $352,000 449,000 552,000 Dividends Paid by Whispering to Coronado $15,000 20,000 70,000 On the books of Coronado Company, prepare all journal entries in 2016, 2017, and 2018 that relate to its investment in Whispering Corp., reflecting the data above and a change from the fair value method to the equity method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanati Credit 11 (Te record the purchase of a 10% interest in Whispering Corp (Te record the receipt of cash dividends from Whispering Corp) To receipt of des quity the increase in fair value of (To record the receipt of cash dividends from Whispering Cop) (Te rogie aspekte quity the decrease in favo available for alle securities (Tore purchase of interest in Whispering and we value to the equity method) (Te reclassify investme carried under fair value method to investment carried under equity method) To climinate accounts and balances med under far val method wing To red cquity in net income of Whispering) (To read the recipe of cash dividende from Whispering Corp Click if you would like to Show Work for this question Open Show Work