Fizer Pharmaceutical paid $73 million on January 2, 2021, for 9 million shares of Carne Cosmetics common
Question:
Fizer Pharmaceutical paid $73 million on January 2, 2021, for 9 million shares of Carne Cosmetics common stock. The investment represents a 25% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne’s operations. Fizer received dividends of $1 per share on December 21, 2021, and Carne reported net income of $44 million for the year ended December 31, 2021. The fair value of Carne’s common stock at December 31, 2021, was $23.50 per share.
- The book value of Carne's net assets was $176 million.
- The fair value of Carne's depreciable assets exceeded their book value by $48 million. These assets had an average remaining useful life of twelve years.
- The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.
Required:
Complete the table below and prepare the appropriate journal entries related to the investment during 2021.
Accounting Principles Volume 2
ISBN: 978-1119502555
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak