Question dealing with the Equity Method from the book, Intermediate Accounting by Donald E. Kieso, Jerry J. Weygandt and Terry D. Warfield (Mar 11, 2013) .

EQUITY METHOD

On January 1, 2008, Gardner Associates purchased 30% of the outstanding shares of stock of

Gillen Corp for $150,000 cash. The investment will be accounted for by the equity method. On that

date, Gillen's net assets had a book value of $300,000. Gardner has determined that the excess

of the cost of its investment in Gillen over its share of Gillen's net assets is attributable to equipment

whose market value exceeds its carrying value by $100,000 and to an operating license whose market

value exceeds its carrying value by $100,000. The remaining useful life of the equipment is ten years

and the remaining useful life of the operating license is 20 years.

Gillen's net income for the year ended Dec 31, 2008, was $60,000. During 2008, Gardner received

$5,000 cash dividends from Gillen.

Required: Record the required entries for the year 2008.