Question

On January 1, 2010 Doe Company purchased 3,000 of the 10,000 common shares outstanding of the Ray Company for $15 per share and obtained significant influence. Doe amortizes its patents over 10 years. The December 31, 2009 condensed balance sheet of the Ray Company is shown here:


Doe Company was unable to determine the fair value of the Ray Company identifiable net assets shown on the preceding balance sheet. It did, however, determine that Ray Company uses the straight-line method (no residual value) to depreciate its fixed assets and to amortize its patents over 20 years and 10 years, respectively. At the end of 2010 Ray Company disclosed the following condensed income statement and retained earnings statement for 2010:


Required
Prepare all the 2010 journal entries that Doe should make related to this investment. Show and label all supportingcalculations.


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  • CreatedDecember 09, 2013
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