On $3$ January $20$X$4,$ Windsor Company purchased $20\%$ of the shares of Brampton for $$640,000$ cash. Windsor will use the equity method. On this date, Brampton has $$1,810,000$ of assets, $$1,448,000$ of liabilities, and $$362,000$ of equity. Book values reflect fair values except for $$810,000$ of equipment, which has a five$-$year life and a fair value of $$1,012,500.$ In $20$X$4,$ Brampton pays $$24,600$ of total dividends and reports earnings of $$82,000.$

Required:

$1.$ Calculate goodwill on acquisition and the annual extra depreciation on investee equipment at fair value.

$2.$ Prepare $20$X$4$ journal entries for Windsor Company. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

Record the investment made in Brampton Corp.

Record the Investment revenue.

Record the receipts of cash dividends paid by Brampton.

$3.$ At the end of $20$X$4,$ what is the balance in the investment account?

Answer rating: 100% (QA)

To solve this problem we will first calculate the goodwill on acquisition and the annual extra depre... View the full answer