What is the solution to this problem On January 1, 2014, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc , for a total of $1,680,000 in cash and other consideration At the acquisition date, Smashing had common stock of $930,000, retained earnings of $480,000, and a noncontrolling interest fair value of $420,000 Corgan attributed the excess of fair value over Smashings book value to various covenants with a 20 year life Corgan uses the equity method to account for its investment in Smashing During the next two years, Smashing reported the following Net Income Dividends Inventory Purchases from Corgan 2014 $ 380,000 $ 58,000 $ 330,000 2015 360,000 68,000 350,000 Corgan sells inventory to Smashing using a 60 percent markup on cost At the end of 2014 and 2015, 40 percent of the current year purchases remain in Smashings inventory a Compute the equity method balance in Corgans Investment in Smashing, Inc , account as of December 31, 2015 b Prepare the worksheet adjustments for the December 31, 2015, consolidation of Corgan and Smashing (If no entry is required for a transaction event, select No journal entry required in the first account field )

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What is the solution to this problem? On January 1, 2014, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for

What is the solution to this problem?

On January 1, 2014, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,680,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $930,000, retained earnings of $480,000, and a noncontrolling interest fair value of $420,000. Corgan attributed the excess of fair value over Smashings book value to various covenants with a 20-year life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

	Net Income		Dividends		Inventory Purchases from Corgan
2014	$	380,000	$	58,000	$	330,000
2015		360,000		68,000		350,000

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2014 and 2015, 40 percent of the current year purchases remain in Smashings inventory.

a.	Compute the equity method balance in Corgans Investment in Smashing, Inc., account as of December 31, 2015.

b.	Prepare the worksheet adjustments for the December 31, 2015, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)