Question
X Company purchased 70% of the outstanding voting shares of S Company at the beginning of 2021 for $630,000. At the time of purchase, S
X Company purchased 70% of the outstanding voting shares of S Company at the beginning of 2021 for $630,000. At the time of purchase, S Companys total stockholders equity is $850,000. Income and dividend distributions for S Company in 2021 are as follows:
Year | Income (Loss) | Dividends Declared |
2021 | $90,000 | $30,000 |
Requirement: Prepare journal entries for X Company in 2021 to account for its investment in S Company using the Complete Equity Method (Assume that the difference between implied value and book value was attributed solely to an excess of market over book values of depreciable assets, with a remaining life of 5 years).
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