Purchase Corporation purchased $60$ percent of Steal Company ownership on January $1,20$X$7,$ for $$280,500.$ Steal

reported the following net income and dividend payments:

On January $1,20$X$7,$ Steal had $$253,000$ of $$5$ par value common stock outstanding and retained earnings of

$$153,000,$ and the fair value of the noncontrolling interest was $$187,000.$ Steal held land with a book value of $$23,50$

and a market value of $$31,000$ and equipment with a book value of $$334,000$ and a market value of $$374,000$ at the

date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of

patents, which had a remaining useful life of $10$ years. All depreciable assets held by Steal at the date of acquisition

had a remaining economic life of eight years.

Required:

a$.$ Compute the increase in the fair value of patents held by Steal. c$.$ Compute the balance reported by Purchase as its investment in Steal at December $31,208.$ d$.$ Prepare the journal entries recorded by Purchase with regard to its investment in Steal during $20$X$9.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field Prepare the consolidation entries needed at December $31,20$X$9,$ to prepare a three$-$part consolidation worksheet

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field Purchase Corporation purchased $60$ percent of Steal Company ownership on January $1,20$X$7,$ for $$280,500.$ Steal reported the following net income and dividend payments:

Year

$20$X$7$

$20$X$8$

$20$X$9$

Net Income

$ $52,000$

$62,000$

$37,000$

Dividends

Paid

$ $32,000$

$42,000$

$17,000$

On January $1,20$X$7,$ Steal had $$253,000$ of $$5$ par value common stock outstanding and retained earnings of $$153,000,$ and the fair value of the noncontrolling interest was $$187,000.$ Steal held land with a book value of $$23,500$ and a market value of $$31,000$ and equipment with a book value of $$334,000$ and a market value of $$374,000$ at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of $10$ years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years.

Required:

a$.$ Compute the increase in the fair value of patents held by Steal.

Increase in fair value

$

$14,000$

c$.$ Compute the balance reported by Purchase as its investment in Steal at December $31,20$X$8.$

Investment in Steal

d$.$ Prepare the journal entries recorded by Purchase with regard to its investment in Steal during $20$X$9.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field

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x

A Record Purchase Corporation's $60\%$ share of Steal

Corporation's $20$X$9$ income.

B Record Purchase Corporation's $60\%$ share of Steal

Corporation's $20$X$9$ dividend.

C Record Purchase Corporation's $60\%$ share of the amortization of the excess acquisition price.

d$.$ Prepare the consolidation entries needed at December $31,20$X$9,$ to prepare a three$-$part consolidation worksheet.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field

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A Record the basic consolidation entry.

B Record the amortized excess value reclassification entry.

C Record the excess value $($differential$)$ reclassification

entry.