3 prepare the necessary entries other than acquisition

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: lue of $11,000,000 as of December 31, 2013. Required: 169.(1.) Prepare the entry to record the original investment in Mountain. (2.) Compute the goodwill (if any) on the acquisition. (3.) Prepare the necessary entries (other than acquisition) for 2013 under the equity method. On July 1, 2013, Clearwater Inc. purchased 6,000 shares of the outstanding common stock of Mountain Corporation at a cost of $140,000. Mountain had 30,000 shares of outstanding common stock. Assume the total book value and fair value of net assets is $650,000. Both companies have a January through December fiscal year. The following data pertains to Mountain Corporation during 2013: Required: 170.Prepare all journal entries for Bactin for 2012 and 2013, assuming no change in fair value of the Oakton stock during that time period. On January 1, 2012, Bactin Corporation acquired 10% of Oakton Company for $100,000. On that date, the total book value and fair value of Oakton's net assets was $900,000. Any difference between cost and fair value is attributable to goodwill. In 2012, Oakton reported net income of $60,000 and paid dividends of $30,000. On January 1, 2013, Bactin Corporation bought another 10% of Oakton for $100,000, and on that date, the book value and fair value of Oakton's net assets still was $900,000 (the fair value of Oakton did not change during 2012). Bactin concluded that its 20% ownership now allowed it to significantly influence Oakton's operations. In 2013, Oakton reported net income of $80,000 and paid dividends of $40,000. Required: 171.(1.) Prepare the appropriate 2013 journal entry to record insurance expense and the increase in the investment, assuming the cash surrender value of the policy increased according to the contract to $70,000. (2.) The CEO died at the end of 2013. Prepare the appropriate journal entry. LaBelle Corporation owns a $6 million whole life insurance policy on the life of its CEO, naming LaBelle as beneficiary. The annual premiums are $95,000 and are payable at the beginning of each year. The cash surrender value of the policy was $56,000 at the b...
View Full Document

This document was uploaded on 07/05/2013.

Ask a homework question - tutors are online