On January 1, 2013, Carlos Corporation purchases 90% (18,000 shares) of the outstanding common stock of Dower


On January 1, 2013, Carlos Corporation purchases 90% (18,000 shares) of the outstanding common stock of Dower Company for $504,000. Just prior to Carlos Corporation€™s purchase, Dower Company has the following stockholders€™ equity:
Common stock ($5 par) ............ $100,000
Paid-in capital in excess of par ........ 300,000
Retained earnings .............. 100,000
Total stockholders€™ equity ......... $500,000
At this time, Dower Company€™s book values approximate fair values except for buildings with a 20-year life. On January 1, 2017, Dower Company€™s retained earnings balance amounts to $200,000. No changes have taken place in the paid-in capital in excess of par accounts since the original sale of common stock on July 10, 2010.
On July 1, 2017, Carlos Corporation sells 2,000 of its Dower Company shares to Tanner Corporation for $100,000. At the time of this sale, Carlos has no intention of selling the balance of its holding in Dower Company.
In an unexpected move on December 31, 2017, Carlos Corporation sells its remaining 80% interest in Dower Company to Tanner Corporation for $540,000. Dower Company€™s reported income and dividends for 2017 are as follows:
On January 1, 2013, Carlos Corporation purchases 90% (18,000 shares)

Prepare the determination and distribution of excess schedule for Carlos Corporation€™s purchase of Dower Company common stock on January 1, 2013. Then, prepare all the entries on Carlos€™s books needed to reflect the changes in its investment account from January 1, 2017, to
December 31, 2017.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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...
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Advanced Accounting

ISBN: 978-0538480284

11th edition

Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng

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