Ball Corporation purchased 30 percent of Krown Companys common stock on January 1, 20X5, by issuing preferred

Ball Corporation purchased 30 percent of Krown Company’s common stock on January 1, 20X5, by issuing preferred stock with a par value of $50,000 and a market price of $120,000. The following amounts relate to Krown’s balance sheet items at that date:

Krown purchased buildings and equipment on January 1, 20X0, with an expected economic life of 20 years. No change in overall expected economic life occurred as a result of the acquisition of Ball’s stock. The amount paid in excess of the fair value of Krown’s reported net assets is attributed to unrecorded copyrights with a remaining useful life of eight years. During 20X5, Krown reported net income of $40,000 and paid dividends of $10,000.

Required
Give all journal entries to be recorded on Ball Corporation’s books during 20X5, assuming it uses the equity method in accounting for its ownership of KrownCompany.

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Book Value Fair Value Cash & Receivables Buildings & Equipment Less: Accumulated Depreciation Total Assets 8 $200,000 $200,000 360,000 Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities 400,000 (100,000) $500,000 50,000 200,000 100,000 150,000 500,000 50,000 200,000