Information: 1/1/20 12/31/20 1/1/21 1/1/21 12/31/21 12/31/21 Big purchased 10% of Little Company for 250,000. Purchase...

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Information: 1/1/20 12/31/20 1/1/21 1/1/21 12/31/21 12/31/21 Big purchased 10% of Little Company for 250,000. Purchase did not give significant influence Little company recognized net income of 150,000 and did not pay dividends during 2020. Big purchased an additional 20% of Little for 525,000. This purchase gave Big the ability to significantly influence Little. Hint: you need to calculate total fair value using this information. Date Little company had a book value of 2,300,000 at acquisition date although land was undervalued by 200,000. Any additional excess value is attributable to a patent with a remaining life of 5 years. Little reported income of 230,000 and declared and paid dividends of 115,000 in 2021. Big sold 100,000 of inventory to little for 150,000 during 2021. As of 12/31, 50,000 Little retained 50,000 of this inventory. Required: 1. Calculate annual amortization if necessary. 2. Calculate the gross profit deferral if necessary. 3. Prepare the journal entries for Big company related to its investment in Little for the period 1/1/2020 - 12/31/2021 Calculate Amortization Here Calculate Gross Profit Deferral Here Post Journal Entries Here Debit Account Credit Information: 1/1/20 12/31/20 1/1/21 1/1/21 12/31/21 12/31/21 Big purchased 10% of Little Company for 250,000. Purchase did not give significant influence Little company recognized net income of 150,000 and did not pay dividends during 2020. Big purchased an additional 20% of Little for 525,000. This purchase gave Big the ability to significantly influence Little. Hint: you need to calculate total fair value using this information. Date Little company had a book value of 2,300,000 at acquisition date although land was undervalued by 200,000. Any additional excess value is attributable to a patent with a remaining life of 5 years. Little reported income of 230,000 and declared and paid dividends of 115,000 in 2021. Big sold 100,000 of inventory to little for 150,000 during 2021. As of 12/31, 50,000 Little retained 50,000 of this inventory. Required: 1. Calculate annual amortization if necessary. 2. Calculate the gross profit deferral if necessary. 3. Prepare the journal entries for Big company related to its investment in Little for the period 1/1/2020 - 12/31/2021 Calculate Amortization Here Calculate Gross Profit Deferral Here Post Journal Entries Here Debit Account Credit

Answer rating: 100% (QA)

Calculate Amortization Here The amortization amount for Big Companys investment in Little Company is ... View the full answer