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2-19 - E2-19 Equity Entries with Positive and Negative...

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E2-19 Equity Entries with Positive and Negative Goodwill a. Journal entries recorded following purchase for $175,000: $175,000 - 40%(100,000+30,000+170,000) = $55,000 Book Value Fair Value 40% of Diff Life Amort Inventory 120,000 130,000 4,000 1 4,000 B&E 150,000 240,000 36,000 10 3,600 Goodwill 15,000 55,000 7,600 (1) Investment in Turner Corporation 175,000 Cash 175,000 Record purchase of Turner stock. (2) Cash 3,200 Investment in Turner Corporation 3,200 Record dividend from Turner: $8,000 x .40 (3) Investment in Turner Corporation 16,000 Income from Turner Corporation 16,000 Record equity-method income: $40,000 x .40 (4) Income from Turner Corporation 4,000 Investment in Turner Corporation 4,000 Write off purchase differential assigned to inventory carried on FIFO basis: $10,000 x .40 (5) Income from Turner Corporation 3,600 Investment in Turner Corporation 3,600 Amortize purchase differential assigned to buildings and equipment: Solutions Manual- Baker/Lembke/King, Advanced Financial Accounting, 6/e 1
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E2-19 (continued) b. Journal entries recorded following purchase for $140,000: $140,000 – 40%(100,000+30,000+170,000) = $20,000 Book Value Fair Value 40% of Diff Life Amort Inventory 120,000 130,000 4,000 1 4,000 B&E 150,000 240,000 36,000 – 20,000 10 1,600
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