On January 3, 2013, McDonald Inc. purchased 40% of the outstanding common stock of Old Farms Co.,

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On January 3, 2013, McDonald Inc. purchased 40% of the outstanding common stock of Old Farms Co., paying $128,000 when the book value of the net assets of Old Farms equaled $250,000. The difference was attributed to equipment, which had a book value of $60,000 and a fair value of $100,000, and to buildings, with a book value of $50,000 and a fair value of $80,000. The remaining useful life of the equipment and buildings was 4 years and 12 years, respectively. During 2013, Old Farms reported net income of $80,000 and paid dividends of $50,000.
Prepare the journal entries made by McDonald Inc. during 2013 related to its investment in Old Farms?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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Intermediate Accounting

ISBN: 978-0538479738

18th edition

Authors: Earl K. Stice, James D. Stice

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