Vikram Bhai On January 1, 2023, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Incorporated, for a total of$910,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $770,000, retained earnings of$320,000, and a noncontrolling interest fair value of $390,000. Corgan attributed the excess of fair value over Smashing's book valueto various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.During the next two years, Smashing reported the following:Items2023Net Income$ 220,000200,000DividendsDeclared$ 42,000Inventory Purchasesfrom Corgan52,000$ 170,000190,0002024Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 30 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.

The consolation is the accounting process in which the financial results of the parent company and…

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.

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.

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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