On January 2, 2011, Best Beverages acquired 45 percent of the stock of Better Bottlers for $30

Question:

On January 2, 2011, Best Beverages acquired 45 percent of the stock of Better Bottlers for $30 million in cash. Best Beverages accounts for its investment using the equity method. At the time of acquisition, Better Bottlers' balance sheet was as follows (in millions):

Better Bottlers Balance Sheet, January 2, 2011

Assets

Current assets................................................................................................................ $ 20

Property and equipment, net.................................................................................... 415

Patents and trademarks............................................................................................ 150

Total assets................................................................................................................... $585

Liabilities and equity

Current liabilities.......................................................................................................... $ 42

Long-term debt.............................................................................................................. 518

Total liabilities.......................................................................................................... .... 560

Capital stock..................................................................................................................... 12

Retained earnings............................ _<....................................................................... 13

Total equity...................................................................................................................... 25

Total liabilities and equity......................................................................................... $585

Valuation of Better Bottlers' assets and liabilities revealed that its reported patents and trademarks (10-year life) had a fair value of $160 million and it had unrecognized brand names (15-year life) worth $9 million. Better Bottlers' December 31, 2014, retained earnings balance is $25 million. For 2014, it reported net income of $2.5 million and paid $650,000 in dividends

Required

a. Prepare the 2014 entries to report the above information on Best Beverages' books.

b. Calculate the Investment in Better Bottlers balance, reported on Best Beverages' December 31, 2014 balance sheet.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...