week 6 - Investment in Downey Enterprises 3,645,000 Cash...

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CONSOLIDATED FINANCIAL STATEMENTS Section A - Journal Entries for 2005 A (1) - Complete the following schedules related to Crain's investment in Downey Calculation of differential Description Imputed Crain Non-Control Percent owned 100% 75% 25% Purchase price 3,645,000 Book value 4,000,000 3,000,000 1,000,000 Purchase differential 645,000 Allocation of purchase price Inventory 300,000 225,000 75,000 700,000 525,000 175,000 Identifiable differential 1,000,000 750,000 250,000 Goodwill (Neg goodwill) (105,000) A (2) - Prepare the entries for Crain to account for its investment in Downey Date Account descriptions Debit Credit Purchase entry
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Unformatted text preview: Investment in Downey Enterprises 3,645,000 Cash 3,645,000 To record the investment in Downey Enterprises 75% of common stocks Record share of earnings Investment in Downey Enterprises 476,250 Equity in investment income 476,250 To accrue equity income for the rest of 2005 Amortize purchase Equity in investment income 264,375 differentials Investment in Downey Enterprises 264,375 To record amortization of fair value in excess of book value Record dividend received Cash 7,500 Investment in Downey Enterprises 7,500 To record receipt of cash dividends from April 1 to December 31, 2005...
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