On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of$1,440,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $870,000, retained earnings of$420,000, and a noncontrolling Interest fair value of $360,000. Corgan attributed the excess of fair value over Smashing's book valueto various covenants with a 20-year remaining life. Corgan uses the equity method to account for Its Investment in Smashing.During the next two years, Smashing reported the following:DividendsDeclaredItems20232024Net Income$ 320,000300,000$ 52,00062,000Required A Required BInventory Purchasesfrom CorganCorgan sells Inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the current yearpurchases remain in Smashing's Inventory.Required:a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024.b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of Corgan and Smashing.Complete this question by entering your answers in the tabs below.Investment balance 12/31/24$ 270,000290,000Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024.Required ARequired B >K

Consolidation is an activity in which financial statements of a parent and its subsidiary are…

On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,440,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $870,000, retained earnings of $420,000, and a noncontrolling Interest fair value of $360,000. 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: Dividends Declared Items 2023 Net Income $ 320,000 $ 52,000 Inventory Purchases from Corgan $ 270,000

On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,440,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $870,000, retained earnings of $420,000, and a noncontrolling Interest fair value of $360,000. 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: Dividends Declared Items 2023 Net Income $ 320,000 $ 52,000 Inventory Purchases from Corgan $ 270,000

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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On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $880,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $730,000, retained earnings of $280,000, and a noncontrolling Interest fair value of $220,000. 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: Itens 2823 2824 Net Incone $188,008 168,000 Dividends Declared $ 38,000 48,000 Inventory Purchases from Corgan $130,000 150,000 Corgan sells Inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 50 percent of the current year purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31,…
On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,680,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $930,000, retained earnings of $480,000, 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: Net Income Dividends Declared Inventory Purchases from Corgan 2020 $ 380,000 $ 58,000 $ 330,000 2021 360,000 68,000 350,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's inventory. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of…
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ed On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $880,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $730,000, retained earnings of $280,000, and a noncontrolling interest fair value of $220,000. 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: Items 2023 Net Income $ 180,000 160,000 Dividend Declare $ 38,000 48,000 Inventory Purchases from Corgan $ 130,000 150,000 2024 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 50 percent of the current year purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December…
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