Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021:

  

On January 1, 2021, Peregrine acquired all of Sprano’s outstanding stock for $680,000 fair value in cash and common stock. At the date of acquisition, copyrights (with a 6-year remaining life) were undervalued by $120,000 (i.e., the market value was higher than book value). Peregrine applies the equity method to maintain the Investment in Sprano account.

As of December 31, 2021, what is the balance of Investment in Sprano reported in Peregrine’s book? Show the entries made to the Investment account during 2021.
 

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Revenues Cost of goods sold Depreciation expense Equity Income in Sprano Retained earnings, 1/1/21 Dividends declared Current assets Copyrights Royalty agreements Investment in Sprano Liabilities Peregrine Sprano $ (700,000) $ (400,000) 250,000 100,000 150,000 200,000 ??? (600,000) 80,000 400,000 900,000 600,000 ??? (950,000) (200,000) 60,000 500,000 400,000 1,000,000 (1,380,000) Revenues Cost of goods sold Depreciation expense Equity Income in Sprano Retained earnings, 1/1/21 Dividends declared Current assets Copyrights Royalty agreements Investment in Sprano Liabilities Peregrine Sprano $ (700,000) $ (400,000) 250,000 100,000 150,000 200,000 ??? (600,000) 80,000 400,000 900,000 600,000 ??? (950,000) (200,000) 60,000 500,000 400,000 1,000,000 (1,380,000)

Answer rating: 100% (QA)

Consolidation worksheet as of December 31 2021 Revenue Cost of goods s... View the full answer