Purchase of Shares at Midyear
Highbeam Corporation paid $319,500 to acquire 90 percent ownership of Copper Company on April 1, 20X2. At that date, the fair value of the noncontrolling interest was $35,500. On January 1, 20X2, Copper reported these stockholders’ equity balances:
Common Stock | $160,000 |
Additional Paid-In Capital | 40,000 |
Retained Earnings | 150,000 |
Total Stockholders’ Equity | $350,000 |
Copper’s operating results and dividend payments for 20X2 were as follows:
| January 1 to March 31 | April 1 to December 31 |
Sales | $90,000 | $250,000 |
Total expenses | (80,000) | (220,000) |
Net income | $10,000 | $ 30,000 |
Dividends paid | $ 5,000 | $ 15,000 |
Highbeam uses the equity method in recording its investment in Copper.
Required
a.Prepare thejournal entries that Highbeam recorded in 20X2 for its investment in Copper.
b.Give the worksheet eliminating entries needed at December 31, 20X2, to prepare consolidated financial statements.
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