On July 1, 2024, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $128 million cash, giving Gupta the ability to exercise significant influence over VB's operations. At the date of acquisition of the stock, VB's net assets had a total fair value of $462 million and a book value of $248 million. Of the $214 million difference, $48 million was attributable to the appreciated value of inventory that was sold during the last half of 2024, $80 million was attributable to buildings that had a remaining depreciable life of 10 years, and $86 million related to equipment that had a remaining depreciable life of five years. Between July 1, 2024, and December 31, 2024, VB earned net income of $64 million and declared and paid cash dividends of $38 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2024, assuming Gupta accounts for this investment by the equity method. 2. Determine the amounts to be reported by Gupta. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare all appropriate journal entries related to the investment during 2024, assuming Gupta accounts for this investment by the equity method. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Show less View transaction list Journal entry worksheet < 1 2 3 4 Record the amortization of the differential. Note: Enter debits before credits. Transaction General Journal Debit Credit 4 Investment revenue Investment in equity affiliate
On July 1, 2024, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $128 million cash, giving Gupta the ability to exercise significant influence over VB's operations. At the date of acquisition of the stock, VB's net assets had a total fair value of $462 million and a book value of $248 million. Of the $214 million difference, $48 million was attributable to the appreciated value of inventory that was sold during the last half of 2024, $80 million was attributable to buildings that had a remaining depreciable life of 10 years, and $86 million related to equipment that had a remaining depreciable life of five years. Between July 1, 2024, and December 31, 2024, VB earned net income of $64 million and declared and paid cash dividends of $38 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2024, assuming Gupta accounts for this investment by the equity method. 2. Determine the amounts to be reported by Gupta. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare all appropriate journal entries related to the investment during 2024, assuming Gupta accounts for this investment by the equity method. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Show less View transaction list Journal entry worksheet < 1 2 3 4 Record the amortization of the differential. Note: Enter debits before credits. Transaction General Journal Debit Credit 4 Investment revenue Investment in equity affiliate
Chapter7: Corporations: Reorganizations
Section: Chapter Questions
Problem 43P
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Transcribed Image Text:On July 1, 2024, Gupta Corporation bought 25% of the outstanding common stock of VB Company for $128 million cash, giving Gupta
the ability to exercise significant influence over VB's operations. At the date of acquisition of the stock, VB's net assets had a total fair
value of $462 million and a book value of $248 million. Of the $214 million difference, $48 million was attributable to the appreciated
value of inventory that was sold during the last half of 2024, $80 million was attributable to buildings that had a remaining depreciable
life of 10 years, and $86 million related to equipment that had a remaining depreciable life of five years. Between July 1, 2024, and
December 31, 2024, VB earned net income of $64 million and declared and paid cash dividends of $38 million.
Required:
1. Prepare all appropriate journal entries related to the investment during 2024, assuming Gupta accounts for this investment by
the equity method.
2. Determine the amounts to be reported by Gupta.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Prepare all appropriate journal entries related to the investment during 2024, assuming Gupta accounts for this investment by the
equity method.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).
Show less
View transaction list
Journal entry
worksheet
<
1
2
3
4
Record the amortization of the differential.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
4
Investment revenue
Investment in equity affiliate
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