Pizza Corporation purchased 100 percent of the common stock of Slice Corporation on January 1, 20X2,...
Pizza Corporation purchased 100 percent of the common stock of
Slice Corporation on January 1, 20X2, by issuing 48,000 shares of
its $7 par value common stock. The market price of Pizza’s shares
at the date of issue was $26. Slice reported net assets with a book
value of $1,136,000 on that date. The amount paid in excess of the
book value of Slice’s net assets was attributed to the increased
value of patents held by Slice with a remaining useful life of 8
years. Slice reported net income of $59,000, paid dividends of
$22,000 in 20X2, reported a net loss of $47,000, and paid dividends
of $12,000 in 20X3.
Required:
Assuming that Pizza Corporation uses the equity method in
accounting for its investment in Slice Corporation, prepare all
journal entries for Pizza for 20X2 and 20X3. (If no entry
is required for a transaction/event, select "No journal entry
required" in the first account field.)
Journal Entries:
Record the purchase of Slice Corporation.
Record the dividend from Slice Corporation for 20X2.
Record the equity-method income or loss for 20X2.
Record the amortization of the differential value for 20X2.
Record the dividend from Slice Corporation for 20X3.
Record the equity-method income or loss for 20X3.
Record the amortization of the differential value for 20X3.
Homework Answers
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Pizza Corporation purchased 100 percent of the common stock of
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