Question

On 3 January 20X4, Windsor Company purchased 10% of the shares of Brampton for $672,000 cash....

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?

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