Summary balance sheet and income information for Son Company for two years is as follows (in thousands):
Question:
Summary balance sheet and income information for Son Company for two years is as follows (in thousands):
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On January 2, 2016, Pop Company purchases 10 percent of Son Company for $25,000 cash, and it accounts for its investment (classified as an available-for-sale security) in Son using the fair-value method. On December 31, 2016, the fair value of all of Son's stock is $500,000. On January 2, 2017, Pop purchases an additional 10 percent interest in Son stock for $50,000 and adopts the equity method to account for the investment. The fair values of Son's assets and liabilities were equal to book values as of the time of both stock purchases.
Required
1. Prepare a journal entry to adjust the Investment in Son account to the equity method on January 2, 2017.
2. Determine Pop's income from Son for 2017?
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Preliminary computations Goodwill from first 10 interest Cost of investment 25000 Book value acquire...View the full answer
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
