Chapter 1 Problem 11-14
1. Journal entries
a. Investment in associate 1,000,000
Cash 1,000,000
b. Investment in associate 175,000
Investment income 175,000
c. Cash 75,000
Investment in associate 75,000
d. Investment income 50,000
Investment in associate 50,000
2. Share in net income 175,000
Amortization of excess (25,000 + 25,000) ( 50,000)
Investment income 125,000
3. Acquisition cost 1,000,000
Net assets acquired (25% x 3,000,000) 750,000
Excess of cost 250,000
Excess attributable to inventory (25% x 100,000) 25,000
Excess attributable to equipment (25% x 500,000) 125,000
Excess attributable to goodwill (25% x 400,000) 100,000
250,000
Acquisition cost 1,000,000
Share in net income (25% x 700,000) 175,000
Amortization of excess:
Inventory ( 25,000)
Equipment (125,000 / 5) ( 25,000)
Cash dividend (25,000 x 3) ( 75,000)
Investment balance 1,050,000
No comments:
Post a Comment