Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor's net assets was equal to $370,000. Accumulated depreciation on this date was $24,000. Paper uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Paper and Scissor as of December 31, 20X9: Cash Accounts Receivable Inventory Investment in Scissor Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scissor Company Total Debit $ 232,000 165,000 193,000 515,000 250,000 875,000 278,000 65,000 312,000 90,000 $ 2,975,000 Paper Company Credit $630,000 85,000 150,000 625,000 498,000 880,000 107,000 $ 2,975,000 Scissor Company Debit $ 116,000 97,000 115,000 0 125,000 250,000 178,000 12,000 58,000 30,000 $ 981,000 (Assume the company prepares the optional Accumulated Depreciation Elimination Entry.) Required: a. Prepare any equity method journal entry(ies) related to the investment in Scissor Company during 20X9. b. Prepare a consolidation worksheet for 20X9. Credit 4 $ 48,000 40,000 100,000 250,000 188,000 355,000 0 $ 981,000

Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $317,700 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $353,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 171,000 170,000 220,000 360,000 206,000 717,000 191,000 48,000 210,000 96,000 $ 2,389,000 Credit $ 435,000 60,000 187,000 480,000 360,100 794,000 72,900 $ 2,389,000 Debit Snoopy Company $ 90,000 69,000 89,000 89,000 192,000 105,000 8,000 48,000 34,000 $724,000 Credit $ 16,000 45,000 68,000 181,000 172,000 242,000 0 $724,000 Required: a. Prepare any…

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On 3 January 20X4, Windsor Company purchased 10% of the shares of Brampton for $608,000 cash. Windsor will use the equity method. On this date, Brampton has $1,980,000 of assets, $1,584,000 of liabilities, and $396,000 of equity. Book values reflect fair values except for $895,000 of equipment, which has a five-year life and a fair value of $1,118,750. In 20X4, Brampton pays $35,400 of total dividends and reports earnings of $118,000. Required: 1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. At the end of 20X4, what is the balance in the investment account?

Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Spark Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows: Cash and Accounts Receivable Inventory Buildings and Equipment (net) Investment in Spark Filter Company Cost of Goods Sold Depreciation Expense Current Liabilities Common Stock Retained Earnings Sales Income from Spark Filter Company Total No A B C Entry 1 2 3 Plug Products Credit $ 154,000 232,000 285,000 On January 1, 20X8, Plug's inventory contained filters purchased for $63,000 from Spark Filter, which had produced the filters for $43,000. In 20X8, Spark Filter spent $103,000 to produce additional filters, which it sold to Plug for $150,907. By December 31, 20X8, Plug had sold all filters that had been on hand January 1, 20X8, but continued to…

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When it purchased Sutton, Inc. on January 1, 20X1, Pavin Corporation issued 500,000 shares of its $5 par voting common stock. On that date the fair value of those shares totaled $4,200,000. Related to the acquisition, Pavin had payments to the attorneys and accountants of $200,000, and stock issuance fees of $100,000. Immediately prior to the purchase, the equity sections of the two firms appeared as follows:     Pavin Sutton Common stock $  4,000,000 $   700,000 Paid-in capital in excess of par 7,500,000 900,000 Retained earnings   5,500,000    500,000 Total $17,000,000 $2,100,000   Immediately after the purchase, the consolidated balance sheet should report retained earnings of: a. $6,000,000 b. $5,800,000 c. $5,500,000 d. $5,300,000

Putt Company issues 500 shares of $100 preferred stock to Drive Corporation in exchange for land on December 31. This land was carried on Drive’s books for $40,000. Required: 1. Prepare the journal entry to record the acquisition of the land for each of the following independent situations: a. The preferred stock is currently selling for $110 per share. No appraisal is available on the land. b. The land is appraised at $65,000. There have been no recent sales of the preferred stock. c. The preferred stock is currently selling for $125 per share. The land is appraised at $64,000.

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