Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $216,000. At that date, the fa value of the noncontrolling interest was $144,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common stock for $97,000. Summarized balance sheets for Split on the dates indicated are as follows: Assets Cash Accounts Receivable Inventory Buildings & Equipment (net) Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities 20X7 $ 49,000 51,000 72,000 370,000 $542,000 $ 77,000 105,000 155,000 205,000 $542,000 Balance in investment account December 31 20X8 $ 79,000 91,000 102,000 350,000 $622,000 $127,000 105,000 155,000 235,000 $622,000 20X9 $ 99,000 121,000 162,000 330,000 $712,000 $167,000 105,000 155,000 285,000 $712,000 Split paid dividends of $22,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and amortizes all differentials over 10 years against the related investment income. All differentials are assigned to patents in the consolidated financial statements. Required: a. Compute the balance in Peel's Investment in Split Products Company Stock account on December 31, 20X8.
Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $216,000. At that date, the fa value of the noncontrolling interest was $144,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common stock for $97,000. Summarized balance sheets for Split on the dates indicated are as follows: Assets Cash Accounts Receivable Inventory Buildings & Equipment (net) Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities 20X7 $ 49,000 51,000 72,000 370,000 $542,000 $ 77,000 105,000 155,000 205,000 $542,000 Balance in investment account December 31 20X8 $ 79,000 91,000 102,000 350,000 $622,000 $127,000 105,000 155,000 235,000 $622,000 20X9 $ 99,000 121,000 162,000 330,000 $712,000 $167,000 105,000 155,000 285,000 $712,000 Split paid dividends of $22,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and amortizes all differentials over 10 years against the related investment income. All differentials are assigned to patents in the consolidated financial statements. Required: a. Compute the balance in Peel's Investment in Split Products Company Stock account on December 31, 20X8.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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