• 1

  Record the initial investment.

• 2

  Record the dividend declaration.

• 3

  Record the receipt of dividend.

• 4

  Record the accrual of income and OCI from equity investee.

• 5

  Record the amortization relating to acquisition of Kinman.

• 6

  Record the deferred unrealized gross profit on intra-entity sale.

• 7

  Record the dividend declaration.

• 8

  Record the receipt of dividend.

• 9

  Record the 40% accrual of income as earned by equity investee.

• 10

  Record the amortization relating to acquisition of Kinman.

• 11

  Record the recognized income deferred from 2020.

• 12

  Record the deferred unrealized gross profit on intra-entity sale.

Harper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January 1,2020 , for $210,000 in cash. The book value of Kinman's net assets on that date was $400,000, although one of the company's buildings, with a $60,000 carrying amount, was actually worth $100,000. This building had a 10 -year remaining life. Kinman owned a royalty agreement with a 20 -year remaining life that was undervalued by $85,000. Kinman sold inventory with an original cost of $60,000 to Harper during 2020 at a price of $90,000. Harper still held $15,000 (transfer price) of this amount in inventory as of December 31, 2020. These goods are to be sold to outside parties during 2021. Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2020 . The company still manages to declare and pay a $10,000 cash dividend during the year. During 2021 , Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory sales of $80,000 to Harper during the period. The original cost of the merchandise was $50,000. All but 30 percent of this inventory had been resold to outside parties by the end of the 2021 fiscal year. Required: Prepare all journal entries for Harper for 2020 and 2021 in connection with this investment. Assume that the equity method is applied. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole number.)