Power Corporation purchased 100 percent of the common stock of Snow Corporation on January 1, 20X2, by issuing 45,000 shares of its $6 par value common stock The market price of Power 's shares at the date of issue was $24 Snow reported net assets with a book value of $980,000 on that date The amou...

Journal entries recorded by Power Corporation 20X2 Investment in Snow Corporation Stock 10 ...

Power Corporation purchased 100 percent of the common stock of Snow Corporation on January 1, 20X2, by

Question:

Power purchased 100 percent of the of Snow on January 1, 20X2, by issuing 45,000 shares of its $6 . The market price of Power's shares at the date of issue was $24. Snow reported net assets with a book value of $980,000 on that date. The amount paid in excess of the book value of Snow's net assets was attributed to the increased value of patents held by Snow with a remaining useful life of eight years. Snow reported net income of $56,000 and paid dividends of $20,000 in 20X2 and reported a net loss of $44,000 and paid dividends of $10,000 in 20X3.

Required
Assuming that Power uses the equity method in accounting for its investment in Snow prepare all journal entries for Power for 20X2 and 20X3.

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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...