Harry Co, acquired 40% interest in the common stock of Gil Co. For $800,000 on January 1, 106 2018, when Gil's stockholders' equity consisted of capital stock of $1,500,000 and 107 retained earnings of $900,000.

At the time of Harry's investment, 

Gil's assets and liabilities were recorded at the 110 fair value, except for a equipment with 15 years remaining useful life that was 111 overvalued for $135,000.

Gil Co. has net income for 2018 of $250,000. 114 Gil Co. paid dividend of 2018 for $85,000.

Required

1. Prepare journal entries for the purchases investment.

2. In this investment purchase there is goodwill? yes or no. 120 What is the amount of goodwill, if there is?

3. Compute Harry's income from Gills for 2018.

4. What is the balance of Harry's Investment in Gil Co. account at December 31, 2018?

Answer rating: 100% (QA)

a company purchases 2050 of the outstanding common of a company the investee becomes its assoc... View the full answer