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On January 1, 2009, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date, Sales Company's stockholders' equity consisted of com- mon stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2009 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company. Part 1 Required: A. Prepare the investment-related entries on Pert Company's books for 2009. B. Prepare the workpaper eliminating entries for a workpaper on December 31, 2009. Part 2 : assume that during 2010 Sales Company earned $190,000 and declared and paid a $50,000 dividend. Required: C. Prepare the investment-related entries on Pert Company's books for 2010. D. Prepare the workpaper eliminating entries for a workpaper on December 31, 2010.

On January 1, 2009, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date, Sales Company's stockholders' equity consisted of com- mon stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2009 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company. Part 1 Required: A. Prepare the investment-related entries on Pert Company's books for 2009. B. Prepare the workpaper eliminating entries for a workpaper on December 31, 2009. Part 2 : assume that during 2010 Sales Company earned $190,000 and declared and paid a $50,000 dividend. Required: C. Prepare the investment-related entries on Pert Company's books for 2010. D. Prepare the workpaper eliminating entries for a workpaper on December 31, 2010.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
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On January 1, 2009, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date, Sales Company's stockholders' equity consisted of com- mon stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2009 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company. Part 1 Required: A. Prepare the investment-related entries on Pert Company's books for 2009. B. Prepare the workpaper eliminating entries for a workpaper on December 31, 2009. Part 2 : assume that during 2010 Sales Company earned $190,000 and declared and paid a $50,000 dividend. Required: C. Prepare the inv D. Prepare the workpaper eliminating entries for a workpaper on December 31, 2010. entries on Company's books for 2010.
Transcribed Image Text:On January 1, 2009, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date, Sales Company's stockholders' equity consisted of com- mon stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2009 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company. Part 1 Required: A. Prepare the investment-related entries on Pert Company's books for 2009. B. Prepare the workpaper eliminating entries for a workpaper on December 31, 2009. Part 2 : assume that during 2010 Sales Company earned $190,000 and declared and paid a $50,000 dividend. Required: C. Prepare the inv D. Prepare the workpaper eliminating entries for a workpaper on December 31, 2010. entries on Company's books for 2010.
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