Jupiter Corporation acquired 80 percent ownership of Saturn Corporation on January 1, 2019, for $820,000. At that date, Saturn reported common stock outstanding of $100,000, additional paid in capital of $510,000 and retained earnings of $160,000. The fair value of the noncontrolling interest was $205,000. On the acquisition date, the fair value of Saturn’s equipment was $160,000 greater than book value and it had a remaining economic life of four years as of the date of the business combination. The fair value of Saturn’s inventory was $30,000 greater than book value and the FIFO method of inventory valuation is used. Assume all the beginning inventory of Saturn was sold during 2019. The balance of the differential, if any, can be attributed to goodwill which was not impaired during the year.

Saturn reported net income of $220,000 and declared/paid dividends of $120,000 in 2019. Jupiter reported separate operating income (not including equity income) of $600,000 in 2019 and declared dividends of $180,000.

Part A Provide all the journal entries recorded by Jupiter during 2019 on its books assuming it accounts for its Investment in Saturn using the equity method.

Answer rating: 100% (QA)

Given in the first statement that Jupiter Corp acquired 80 ownership justify the method that we shou... View the full answer