Question

Weal Corporation purchased 60 percent of Modern Products Company's shares on December 31, 20X7, for $210,000. At that date, the fair value of the noncontrolling interest was $140,000.
On January 1, 20X9, Weal purchased an additional 20 percent of Modern's common stock for $96,000. Summarized balance sheets for Modern on the dates indicated are as follows:


Modern paid dividends of $20,000 in each of the three years. Weal uses the basic equity method in accounting for its investment in Modern and amortizes all differentials over 10 years against the related investment income. All differentials are assigned to patents in the consolidated financial statements.

Required
a. Compute the balance in Weal's Investment in Modern Products Company Stock account on December 31, 20X8.
b. Compute the balance in Weal's Investment in Modern Products Company Stock account on December 31, 20X9.
c. Prepare the elimination entries needed as of December 31, 20X9, to complete a three-part consolidationworksheet.


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  • CreatedMay 23, 2014
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