Sadi Corporation had the following balance sheet as of December 2010:

Sadi Corporation

Balance Sheet as of December 31, 2010

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Book Value Fair Value

Cash $ 1,000 $ 1,000

Account receivables 2,400 1,800

Inventories 2,000 2,400

Equipment (net) 4,000 3,000

Building (net) 1,000 3,000

Patent -------- 3,200

Total Assets $10,400 $14,400

Notes Payable $ 1,200 $ 1,500

Common Stock $10 par 6,000

Retained Earnings 3,200

Total $10,400

During 2011 Sadi Corporation made net income of $3,800 and paid cash dividend of $3,200 on November 15, 2011. The market value of Sadis share as of December 31, 2011 was $28 per share.

1.Pop Corporation purchased 60 shares, 10% interest in Sadi Corporation for $1,500 cash on January 1, 2011.

Required:

Prepare all necessary journal entries in the book of Pop Corporation for its investment during 2011.

2.Pop Corporation purchased 60 shares, 10% interest in Sadi Corporation for $1,500 cash on January 1, 2011.

Assume Sadi Corporation paid cash dividend of $4,000 (instead of $3,200) on November 2011. The remaining above information is valid.

Required:

Prepare all necessary journal entries in the book of Pop Corporation for its investment during 2011.

3.Pop Corporation purchased 180 shares, 30% interest in Sadi Corporation for $4,500 cash on January 1, 2011. Sadi still reported net income of $1,800 and Cash dividend of $1,200.

Assuming, the accounts receivables reported in the above balance sheet are collected, and the inventory reported in the above balance sheet is sold during 2011. At the time of the acquisition, the note payable was due in two years, the remaining life of the equipment was 4-years, the remaining life of building was 6-years, and the remaining life of patent was 8-years.

Required (show all your calculations):

Prepare all necessary journal entries in the book of Pop Corporation for its investment during 2011.

Value investment at fair cost