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 Plug Products Credit $ 154,000 232,000 285,000 260,428 170,000 35,000 Debit $ 184,893 196,000 462,000 253,907 39.628 Spark Filter Company Credit Debit $ 91,000 120,000 192,000 135,000 25,000 $ 63,093 85,000 211,000 203,907

Ice Corporation owns 30% of Idea Company and applies the equity method. In 2XX0, Ice Corp. sells merchandise costing $288,000 to Idea for $360,000. Idea's ending inventory includes $60,000 purchased from Ice. Which of the following is the correct equity method entry to record the realization of the gross profit in 2XX1? Select one: O a. O Equity Investment Cost of Goods Sold b. Equity Income Equity Investment C. d. Equity Income Debit Credit 60,000 Equity Investment 3,600 Equity Income Equity Investment 60,000 Debit Credit 3,600 Debit Credit 3,600 3,600 Debit Credit 60,000 60,000

Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Cash Receivables Inventory Land Building and equipment (net) Franchise agreements Accounts payable Accrued expenses Longterm liabilities Common stock-$20 par value Common stock-$5 par value Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Inventory Land Accounts Buildings and equipment Franchise agreements Goodwill Revenues Additional paid-in capital $ Expenses Retained earnings, 1/1 Retained earnings, 12/31 Padre Company Amounts Sol Company Book Values Book Values Fair Values 12/31 12/31 84, 100 392,000 249,000 200,000 237,000 Note: Parentheses indicate a credit balance. On December 31, Padre acquires Sol's outstanding stock by paying $349,000 in cash and issuing 11,400 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $23,400 as well as $12,800 in stock…

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