Journal entry worksheet Year 3

Record dividend received from Y Record share in net income of Y

Record entry to eliminate profit on intercompany inventory transfer

Record entry to eliminate gain/losson transfer of land

Record entry to amortize aqusitional differential

year 4

Record dividend received from Y

Record share in net income of Y

Record entry to amortize aqusitional differential

Record entry to realize opening inventory profit

Record entry to realize profit on land sale

Record entry to eliminate profit on intercompany inventory transfer

X Co. acquired 80% of Y Co. on January 1, Year 3, when Y Co. had common shares of $210,000 and retained earnings of $81,000. The acquisition differential was allocated as follows on this date: Since this date the following events have occurred: Year 3 - Y Co. reported a net income of $151,000 and paid dividends of $36,000. - On July 3, X Co. sold land to Y Co. for $134,000. This land was carried in the records of X Co. at $86,000. - On December 31, Year 3, the inventory of X Co. contained an intercompany profit of $41,000. - X Co. reported a net income of $510,000 from its own operations. Year 4 - Y Co. reported a net loss of $27,000 and paid dividends of $4,000. - Y Co. sold the land that it purchased from X Co. to an unrelated company for $151,000. - On December 31, Year 4, the inventory of Y Co. contained an intercompany profit of $23,000. - X Co. reported a net income from its own operations of $83,000. Required: Assume a 40% tax rate. (a) Prepare X Co.'s equity method journal entries subsequent to the date of acquisition for each of Years 3 and 4 . (Input all values as positive numbers. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Input all values as positive numbers.) (c) Prepare a statement showing the changes in non-controlling interest in each of Years 3 and 4 . (Net loss amount should be indicated with a minus sign and input all other amounts as positive values. Omit $ sign in your response.) (d) Now assume that X Co. is a private company, uses ASPE, and chooses to use the equity method. Calculate the balance in the Investment in Y Co. account as at December 31, Year 4. (Omit $ sign in your response.) Investment in Y Co. - December 31, Year 4 $