Monroe Company purchased 80% of Adams Company on January 1, 20X1.The purchase price paid was $600,000. On
Question:
Monroe Company purchased 80% of Adams Company on January 1, 20X1.The purchase price paid was $600,000. On that day, the book value of Adams. was $500,000. Excess of cost over book value is due to goodwill. Included in Adams's income are intercompany sales to Monroe of $40,000 with a cost to Adams of $25,000.30% of this inventory is on hand in the Monroe inventory at December 31, 20X3. In addition, inventory sold at a profit of $5,000 was in the inventory of Monroe at December 31, 20X2.Adams reported income of $100,000 in 20X3 but paid no dividends.
A. Prepare a schedule of Excess of Cost over Book Value at the date of purchase.
b. For 20X3, prepare on the books of Monroe the full equity method journal entries.
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik