Parent Company Journal Entries and Remeasurement
Refer to the information given in Problems P12-23 and P12-26 for Alamo and its subsidiary, Western Ranching. Assume that the U.S. dollar is the functional currency and that Alamo uses the basic equity method for accounting for its investment in Western Ranching.
Required
a.Prepare the entries that Alamo would record in 20X3 for its investment in Western Ranching. Your entries should do the following:
(1) Record the initial investment on January 1, 20X3.
(2) Record the dividend received by the parent company.
(3) Recognize the parent company’s share of the equity income from the subsidiary.
(4) Record the amortizations of the differential.
b.Provide the necessary documentation and support for the amounts recorded in the journal entries.
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