On 3 January 20X4,
Windsor Company purchased 10% of the shares of Brampton for
$672,000 cash. Windsor will use the equity method. On this date,
Brampton has $1,950,000 of assets, $1,560,000 of liabilities, and
$390,000 of equity. Book values reflect fair values except for
$880,000 of equipment, which has a five-year life and a fair value
of $1,100,000. In 20X4, Brampton pays $33,600 of total dividends
and reports earnings of $112,000.
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.)
1, Record the investment made in Brampton Corp.
2, Record the Investment revenue.
3. Record the receipts of cash dividends paid by Brampton.
3. At the end of 20X4, what is the balance in the investment
account?
On 3 January 20X4, Windsor Company purchased 10% of the shares of Brampton for $672,000 cash....
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