On January 1, 2009, Pert Company purchased 85% of the outstanding common stock of SalesCompany 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 recordedcost of Sales Company's land was significantly less than its fair value.During 2009 Sales Company earned $148,000 and declared and paid a $50,000dividend. Pert Company used the partial equity method to record its investment in SalesCompany.Part 1Required: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 andpaid 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.

Answered: Part 1 Required: A. Prepare the…

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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…
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At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $45 million. At the time of purchase, the carrying value of Sky Tech's net assets was $75 million. The fair value of Sky Tech's depreciable assets was $15 million in excess of their book value. For this year, Sky Tech reported a net income of $75 million and declared and paid $15 million in dividends.The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is:
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