Record the annual dividend declared and received from Bowden.
Record accrue 2017 income based on 40% ownership of Bowden.
Record amortization of $60,000 excess patent fair value [indicated in problem] over 15 years.
Record the entry to accrue ½ year income of 40% ownership.
Record ½ year amortization of patent to establish correct book value for investment as of 7/1/18.
Record 20,000 shares of Bowden Company sold; investment basis computed below.
Record annual dividend declared and received.
Record ½ year income based on remaining 30% ownership.
Record ½ year of patent amortization.
No | Date | General Journal | Debit | Credit |
1 | 01-01-17 | Invesment in Bowden | $ 976,000 | |
Cash | $ 976,000 | |||
2 | 15-09-17 | Cash | $ 36,800 | |
Investment in Bowden | $ 36,800 | |||
(92000*40%) | ||||
3 | 31-12-17 | Investment in Bowden | $ 160,800 | |
Equity in investee income | $ 160,800 | |||
($402,000*40%) | ||||
4 | 31-12-17 | Equity in investee income | $ 4,000 | |
Investment in Bowden | $ 4,000 | |||
($60000/15 years) | ||||
5 | 01-07-18 | Investment in Bowden | $ 69,200 | |
Equity in investee income | $ 69,200 | |||
($346,000*40%*6/12 months) | ||||
6 | 01-07-18 | Equity in investee income | $ 2,000 | |
Investment in Bowden | $ 2,000 | |||
($60000/15 years)*6/12 months | ||||
7 | 01-07-18 | Cash | $ 332,000 | |
Investment in Bowden | $ 290,800 | |||
Gain on sale of investment | $ 41,200 | |||
8 | 15-09-18 | Cash | $ 27,600 | |
Investment in Bowden | $ 27,600 | |||
($92000*30%) | ||||
9 | 31-12-18 | Investment in Bowden | $ 51,900 | |
Equity in investee income | $ 51,900 | |||
($346000*30%*6/12) | ||||
10 | 31-12-18 | Equity in investee income | $ 1,500 | |
Investment in Bowden | $ 1,500 | |||
($4000*30%/40%)*6/12 months |
Working:
01-01-17 | Acqusition | $ 976,000 | |
15-09-17 | Dividends | $ (36,800) | |
31-12-17 | Basic equity accrual | $ 160,800 | |
31-12-17 | Amortization | $ (4,000) | |
01-07-18 | Basic equity accrual | $ 69,200 | |
00-01-00 | Amortization | $ (2,000) | |
Invesment Balance 1/7/2018 | $ 1,163,200 | ||
Value of 40% shares= | $ 1,163,200 | ||
Value of 10% shares=1163200/40%*10% | |||
= | $ 290,800 |
Record the annual dividend declared and received from Bowden. Record accrue 2017 income based on 40%...
On January 1, 2017, Fisher Corporation purchased 40 percent (86,000 shares) of the common stock of Bowden, Inc. for $974,000 in cash and began to use the equity method for the investment. The price paid represented a $60,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered...
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On January 1, 2017, Fisher Corporation purchased 40 percent (86,000 shares) of the common stock of Bowden, Inc. for $980,000 in cash and began to use the equity method for the investment. The price paid represented a $60,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered...
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