Question: Windsor Company purchased 30 of the shares of Brampton for

Windsor Company purchased 30% of the shares of Brampton for $ 565,000 cash. Windsor will use the equity method. On this date, Brampton has $ 2,000,000 of assets, $ 1,600,000 of liabilities, and $ 400,000 of equity. Book values reflect for values except for $ 800,000 of equipment, which has a five- year life and a fair value of $ 1,000,000. In 20X4, Brampton pays $ 30,000 of total dividends and reports earnings of $ 100,000.

1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value.
2. Prepare 20X4 journal entries for Windsor Company.
3. At the end of 20X4, what is the balance in the investment account?

View Solution:

Sale on SolutionInn
  • CreatedFebruary 17, 2015
  • Files Included
Post your question