HW 1 with solution - Ch 1 Equity Method(2)

HW 1 with solution - Ch 1 Equity Method(2) - 1 Homework Ch...

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Unformatted text preview: 1 Homework Ch 1: Three Problems: 1 15, 1 18, and 1 - 31. Solutions: Problem 1: 1- 15.(10 minutes) (Equity entries for one year, includes intra-entity transfers but no unearned gain) Purchase price of Batson stock ......................................................... $210,000 Book value of Batson stock ($360,000 40%).................................. (144,000 Unidentified asset (goodwill) ............................................................. $66,000 ) Life .................................................................................................... Indefinite Annual amortization........................................................................... $ -0- No unearned intra-entity gain exists at years end because all of the transferred merchandise was used during the period. Investment in Batson, Inc. ............................................ 210,000 Cash (or a liability) .................................................. 210,000 To record acquisition of a 40 percent interest in Batson. Investment in Batson, Inc. ............................................ 32,000 Equity in Investee Income ....................................... 32,000 To recognize 40 percent income earned during period by Batson, an investment recorded by means of the equity method....
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HW 1 with solution - Ch 1 Equity Method(2) - 1 Homework Ch...

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