On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,540,000 in cash a other consideration. At the acquisition date, Smashing had common stock of $950,000, retained earnings of $500,000, and a noncontrolling interest fair value of $660,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Inventory es 2020 2021 Net Income $400,000 380,000 Dividends Declared $60,000 70,000 Purchases from Corgan $350,000 370,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 percent of the current year purchases remain in Smashing's inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,540,000 in cash a other consideration. At the acquisition date, Smashing had common stock of $950,000, retained earnings of $500,000, and a noncontrolling interest fair value of $660,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Inventory es 2020 2021 Net Income $400,000 380,000 Dividends Declared $60,000 70,000 Purchases from Corgan $350,000 370,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 percent of the current year purchases remain in Smashing's inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Expert Answer:
Answer rating: 100% (QA)
Lets start with part A To compute the equity method balance in Corgans Investment in Smashing Inc ac... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
Students also viewed these accounting questions
-
Building on the work you have already completed; you are required to identify the correct communication process for two scenarios. You are required to integrate evidence of increased skills and...
-
The hydrolysis of acetic anhydride to form acetic acid is carried out in a 1250 litre CSTR. The feed concentration is 2.5 M acetic anhydride and 50 M water. The volumetric flow rate of the feed is 15...
-
Why is globalization of industries a common factor today?
-
Afton Products currently pays a dividend of $4 per share on its common stock. a. If Afton Products plans to increase its dividend at a rate of 5% per year indefinitely, what will be the dividend per...
-
Assume you are a dissertation chair. You have a student who has come to you with a problem space and is struggling with choosing the methodology for the study. How would you explain to this person...
-
The flow of water in a 3-mm-diameter pipe is to remain laminar. Plot a graph of the maximum flowrate allowed as a function of temperature for \(0
-
(Leverage analysis) You have developed the following income statement for the Hugo Boss Corporation. It represents the most recent year's operations, which ended yesterday. Your supervisor in the...
-
Perform an economic analysis studying impacts of Covid-19 on health or health care. For the research bibliography, we need to provide ten (or more) complete research citations. Majority of citations...
-
Eli Lilly and Company: The Flexible Facility Decision 1) What is the situation with their operations strategy and financial performance that impacts the decision this company is faced with? 2)...
-
If you are to write a code of ethics for a drug company ,will you include the provision of not using humans as guine pig for drug testing explaine your argument.
-
One of the operating system's objectives is the ability to evolve. Using two different operating system types as an example, explain TWO (2) reasons from each type of operating system on how the...
-
The p1,000 face value of Ayala Company bond has a coupon of 10% (paid semi-annually), matures in 4 years, and has a current price of p1,140. What is the bond's yield to maturity.
-
What are the three types of information a business owner might get from a projected profit and loss statement?
-
18 The random variable X has probability distribution given by x-1 36 x = 2, 3, 4, 5, 6, 7 P(X = x) = m-x 36, x=8, 9, 10, 11, 12 (a) Find the value of m. (b) Calculate E(X) and Var(X).
-
Assume that you have received a job offer to be a manager within the virgin group. Determine the criteria you would use to evaluate whether Richard Bransons leadership style is a good fit for you as...
-
The trade-off theory relies on the threat of financial distress. But why should a public corporation ever have to land in financial distress? According to the theory, the firm should operate at the...
-
Entrepreneur magazine ranks franchises. Among the factors that the magazine uses in its rankings are growth rate, number of locations, start-up costs, and financial stability. A recent ranking listed...
-
The following 20 observations are for two quantitative variables, x and y. a. Create a scatter chart for these 20 observations. b. Fit a linear trendline to the 20 observations. What can you say...
-
Blatt Consulting Services is interested in comparing the number of customer accounts managed by its consultants. The chart below is a default chart produced in Excel. a. Which preattentive attributes...
Study smarter with the SolutionInn App