Journal entries to apply the equity method of accounting for investment in securities. The following information summarizes

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Journal entries to apply the equity method of accounting for investment in securities. The following information summarizes data about the minority, active investments of Stebbins Corporation.


Carrying Value of Identifiable Net Assets on January 1, 2008 Date Acquisition Cost Ownership Percentage Acquired Securit



Company R owns a building with 10 years of remaining life and with a fair value exceeding its carrying value by $160,000. $40,000 of this amount applies to the share Stebbins Corporation Owns. Stebbins Corporation attributes the rest of any excess of acquisition cost over carrying value acquired to goodwill. The building has a 10-year remaining life. The fair values of the recorded net assets of Company S and Company T equal their carrying values. There are no goodwill impairments.
a. Give the journal entries to record the acquisition of these investments and to apply the equity method during 2008 and 2009.
b. Stebbins Corporation sells Security R on January 1, 2010, for $275,000. Give the journal entry to record thesale.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For  answer-question

Financial Accounting an introduction to concepts, methods and uses

ISBN: 978-0324789003

13th Edition

Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis

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