1. (20 pts) Calamari Company purchased 30% of Squid Company for $875,000 in cash on January...

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1. (20 pts) Calamari Company purchased 30% of Squid Company for $875,000 in cash on January 1, 2021. On the date of purchase, Squid's book value was $2,200,000. Excess of cost over book value assigned to Calamari amounting to $50,000 is due to undervalued Equipment and is to be amortized over 5 years. The rest is due to Goodwill. Journalize the following for 2021 on the books of Calamari, assuming Calamari uses the equity method: a. Squid reported a total net income of $700,000. Journalize the recording of the correct income on the books of Calamari. b. Total dividends paid by Squid amounted to $100,000. c. The market value of Calamari's investment in Squid at year end had changed to $940,000. d. Calamari then sold half of its investment in Squid, losing significant influence, for $450,000. 1. (20 pts) Calamari Company purchased 30% of Squid Company for $875,000 in cash on January 1, 2021. On the date of purchase, Squid's book value was $2,200,000. Excess of cost over book value assigned to Calamari amounting to $50,000 is due to undervalued Equipment and is to be amortized over 5 years. The rest is due to Goodwill. Journalize the following for 2021 on the books of Calamari, assuming Calamari uses the equity method: a. Squid reported a total net income of $700,000. Journalize the recording of the correct income on the books of Calamari. b. Total dividends paid by Squid amounted to $100,000. c. The market value of Calamari's investment in Squid at year end had changed to $940,000. d. Calamari then sold half of its investment in Squid, losing significant influence, for $450,000.

Answer rating: 100% (QA)

Calamari Company Equity Method in 2021 a Recording Squids Net Income gherkin Date Account Debit Cred... View the full answer