Question

Albuquerque, Inc., acquired 16,000 shares of Marmon Company several years ago for $600,000. At the acquisition date, Marmon reported a book value of $710,000, and Albuquerque assessed the fair value of the noncontrolling interest at $150,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.
At the present time, Marmon reports $800,000 as total stockholders’ equity, which is broken down as follows:
Common stock ($10 par value) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $800,000

View the following as independent situations:
a. Marmon sells 5,000 shares of previously unissued common stock to the public for $47 per share.
Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction?
b. Marmon sells 4,000 shares of previously unissued common stock to the public for $33 per share.
Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction?



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  • CreatedOctober 04, 2014
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