Ahmed Corporation purchased 75 percent of Gander Company's common shares and 40 percent of its preferred...

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Ahmed Corporation purchased 75 percent of Gander Company's common shares and 40 percent of its preferred shares on January 1, Year 6, for $540,000 and $160,000, respectively. At the time of purchase, the fair value of Gander's common and preferred shares was equal to their carrying value. Gander's balance sheet contained the following balances: Preferred Shares ($10 par value) Common Shares Retained Earnings Total Shareholders' Equity $ 400,000 300,000 420,000 $ 1,120,000 For the year ended December 31, Year 6, Gander reported net income of $140,000 and paid dividends of $52,000 (which includes the preferred dividend). The preferred shares are cumulative and pay an annual dividend of 4 percent. There were no dividends in arrears at the date of acquisition. Ahmed uses the cost method to account for its interest in the preferred shares of Gander and the equity method to account for its interest in the common shares of Gander. Required: (a) Prepare the journal entries recorded by Ahmed for its investments in Gander during Year 6. (If transaction/event, select "No journal entry required" in the first account field.) View transaction list A Record the purchase of Gander shares. B Record the dividends on preferred shares from Gander. с Record the equity-method income. D Record the dividends from Gander. EX: (b) Calculate non-controlling interest's share of net income and non-controlling interest on the balance sheet for the Year 6 consolidated financial statements. (Omit $ sign in your response.) Non-controlling interest's share of net income Non-controlling interest on the balance sheet 69 69 Ahmed Corporation purchased 75 percent of Gander Company's common shares and 40 percent of its preferred shares on January 1, Year 6, for $540,000 and $160,000, respectively. At the time of purchase, the fair value of Gander's common and preferred shares was equal to their carrying value. Gander's balance sheet contained the following balances: Preferred Shares ($10 par value) Common Shares Retained Earnings Total Shareholders' Equity $ 400,000 300,000 420,000 $ 1,120,000 For the year ended December 31, Year 6, Gander reported net income of $140,000 and paid dividends of $52,000 (which includes the preferred dividend). The preferred shares are cumulative and pay an annual dividend of 4 percent. There were no dividends in arrears at the date of acquisition. Ahmed uses the cost method to account for its interest in the preferred shares of Gander and the equity method to account for its interest in the common shares of Gander. Required: (a) Prepare the journal entries recorded by Ahmed for its investments in Gander during Year 6. (If transaction/event, select "No journal entry required" in the first account field.) View transaction list A Record the purchase of Gander shares. B Record the dividends on preferred shares from Gander. с Record the equity-method income. D Record the dividends from Gander. EX: (b) Calculate non-controlling interest's share of net income and non-controlling interest on the balance sheet for the Year 6 consolidated financial statements. (Omit $ sign in your response.) Non-controlling interest's share of net income Non-controlling interest on the balance sheet 69 69

Answer rating: 100% (QA)

C Investment in Gander Common Shares 93000 Income from Gander Co 93000 B Non... View the full answer