Question: Ball Corporation purchased 30 percent of Krown Company s common stock

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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  • CreatedMay 23, 2014
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