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Purple Corporation owns 80 percent of Corn Corporation's common stock. It purchased the shares on January 1, 20X1, for $520,000. At the date of acquisition,

Purple Corporation owns 80 percent of Corn Corporation's common stock. It purchased the shares on January 1, 20X1, for $520,000. At the date of acquisition, the fair value of the noncontrolling interest was $130,000, and Corn reported common stock outstanding of $400,000 and retained earnings of $200,000. The differential is assigned to a trademark with a life of five years. Each year since acquisition, Corn has reported income from operations of $60,000 and paid dividends of $25,000.

Corn purchased 70 percent ownership of Bark Company on January 1, 20X3, for $406,000. At that date, the fair value of the noncontrolling interest was $174,000, and Bark reported common stock outstanding of $250,000 and retained earnings of $300,000. In 20X3, Bark reported net income of $30,000 and paid dividends of $20,000. The differential is assigned to buildings and equipment with an economic life of 10 years at the date of acquisition.

Required:
a.

Prepare the journal entries recorded by Corn for its investment in Bark during 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

record the purchase of bark company stock

record the dividends from bark company

record the equity-method income

record the entry to amortize the differential related to buildings and equipment

b.

Prepare the journal entries recorded by Purple for its investment in Corn during 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

record the dividends from corn corporation

record the equity method income

record the entry to amortize the differential related to the trademark

c.

Prepare the consolidation entries related to Corns investment in Bark and Purples investment in Corn needed to prepare consolidated financial statements for Purple and its subsidiaries at December 31, 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

record the basic consolidation entry for the investment in bark company 2. record the amortized excess value reclassification entry for the investment in bark company 3. record the excess value (differential) reclassification entry for the investment in Bark Company 4. record the basic consolidation entry for the investment in corn company. 5. record the amortized excess value reclassification entry for the investment in corn company 6. record the excess value (differential) classification entry for the investment in corn company.

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