On January 1, 2020, Coldspring Corp. paid $770,000 to acquire Whitt Co. Coldspring used the equity method to account for the investment. The following information is available for the assets, liabilities, and stockholders' equity accounts of Whitt:

	Book Value	Fair Value
Current assets	$95,000	$95,000
Land	95,000	120,000
Building (twenty year life)	255,000	310,000
Equipment (five year life)	185,000	190,000
Current liabilities	40,000	40,000
Long-term liabilities	65,000	65,000
Common stock	140,000
Additional paid-in capital	300,000
Retained earnings	210,000

Whitt earned net income for 2020 of $125,000 and paid dividends of $18,000 during the year.

1. The 2020 consolidation entry to reverse Coldspring’s recognition of Whitt's income and dividends in the current year would include a net credit to Equity Investment for:

2.If Coldspring had income from its own operations, excluding any investment income, of $425,500 in 2020, what would be consolidated net income?

The answers are 103,250 and 546,750, How to get these answers?

Answer rating: 100% (QA)

To calculate the answers provided 1 The 2020 consolidation entry to reverse Coldsprings recognition ... View the full answer