Question: Clark Company acquires an 80 interest in Hebron Company common

Clark Company acquires an 80% interest in Hebron Company common stock for $400,000 cash on January 1, 2011. At that time, Hebron Company has the following balance sheet:
Appraisals indicate that accounts are fairly stated except for the equipment, which has a fair value of $250,000 and a remaining life of five years. Any remaining excess is goodwill. Hebron Company experiences the following changes in retained earnings during 2011 and 2012:
Prepare a determination and distribution of excess schedule for the investment in Hebron Company (a value analysis is not needed).
Prepare journal entries that Clark Company would make on its books to record income earned and/or dividends received on its investment in Hebron Company during 2011 and 2012 under the following methods: simple equity, sophisticated equity, and cost.

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  • CreatedApril 13, 2015
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