Question

2. Award A 142 ports On July 1, 2018. Gupta Corporation bought 25% of the outstanding common stock f of the stock Vas not assets had a total of $350 and rib e to the preciated value of inventory that was o o depreciable ecember 31, 2017 10 value of new 10 years, and 30 m het mome of 30 million and Company for $10 million cash the date o u ring the last half of 2018, S on was the lo blogs that had a the remaining depreci o year wenuity 1, 2018 m on and declared and paid cash dividends on Required 1. Prepare a proprie journal 2. Detine thout to be reported by G during 2018 asing up accounts for investment by the uity method O c Complete this question by entering your answers in the tabs below. Required Required 2 Prepare all appropriate journal entries related to the investment during 2018, assuming Gupta accounts for this investment by the equity quired for a transaction event, select "No journal entry required in the first account feld. Do not round intermediate calculations Enter te calculations. Enter your answers in milions rounded to 2 decimal places cl.e., 5,500,000 should be entered as 5.50).) Journal entry worksheet Record the amortization of the differential Note: Enter debits before credits Debit Credit General Journal vestrert Relente Iwesthet in VB Shares Record entry Clearntry View general Journal Required Required 2 >

Answer 1

Notes 1
Inventory (That sold during the last half of 2018)	$          20
Amortization of building (80/10)	$             8
Amortization of equipment (30/5)	$             6
Total	$          34

Journal entries		Equity method
Event	Account title	Debit	Credit
1	Equity Investment in VB company	$               100.00
	Cash		$               100.00
	(To record acquisition cost of investment.)
2	Equity Investment in VB company	$                    8.00
	Investment Revenue		$                   8.00
	(To record share in net income.) (32*25%)
3	Cash	$                    6.00
	Equity Investment in VB company		$                   6.00
	(To record share of dividend received.)(24*25%)
4	Investment Revenue	$                    8.50
	Equity Investment in VB company		$                   8.50
	(To record amortization of differential.)(Notes 1) (34*25%)

	Acquisition cost of investment	$               100.00
Add:	Share in net income	$                    8.00
Less:	Share of dividend received	$                 (6.00)
Less:	Amortization of differential	$                 (8.50)
	Investment in gupta's December 31, 2018, balance sheet	$                 93.50
	Share in net income	$                    8.00
Less:	Amortization of differential	$                 (8.50)
	Investment revenue (loss) in gupta's 2018 income statement	$                 (0.50)
	Acquisition cost of investment	$             (100.00)
	Dividend received is reported under the operating activity. Therefore, amount reported under investing activity will be 0.
	Cash inflow (Outflow) form investing activity, in gupta's 2018, statement of cash flows	$             (100.00)