On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting cash and other consideration. At the acquisition date, Smashing had common stock o noncontrolling interest fair value of $420,000. Corgan attributed the excess of fair va covenants with a 20-year remaining life. Corgan uses the equity method to account f During the next two years, Smashing reported the following: Inventory Dividends Purchases from Declared $44,000 Net Income Corgan $190,000 2020 $240,000 2021 220, 000 54,000 210,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end o purchases remain in Smashing's inventory.
On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting cash and other consideration. At the acquisition date, Smashing had common stock o noncontrolling interest fair value of $420,000. Corgan attributed the excess of fair va covenants with a 20-year remaining life. Corgan uses the equity method to account f During the next two years, Smashing reported the following: Inventory Dividends Purchases from Declared $44,000 Net Income Corgan $190,000 2020 $240,000 2021 220, 000 54,000 210,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end o purchases remain in Smashing's inventory.
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
Problem 8MC
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Transcribed Image Text:On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $980,000 in
cash and other consideration. At the acquisition date, Smashing had common stock of $790,000, retained earnings of $340,000, and a
noncontrolling interest fair value of $420,000. 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
Dividends Purchases from
Net Income
Declared
Corgan
$190,000
210, 000
$240, 000
$44,000
54,000
2020
2021
220,000
Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 50 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
Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021.
Investment balance 12/31/21
Required A
Required B >
Transcribed Image Text: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.)
view transaction list
:X:
1 Prepare entry *G
>
2 Prepare entry S
3 Prepare entry A
4 Prepare entry I
5 Prepare entry D
Credit
6 Prepare Entry E
7 Prepare entry TI
8 Prepare entry G
Note :
= journal entry has been entered
Record entry
Clear entry
view consolidation entries
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