On 3 January 20X4, Windsor Company purchased 10% of the shares of Brampton for $608,000 cash. Windsor will use the equity method. On this date, Brampton has $1,980,000 of assets, $1,584,000 of liabilities, and $396,000 of equity. Book values reflect fair values except for $895,000 of equipment, which has a five-year life and a fair value of $1,118,750. In 20X4, Brampton pays $35,400 of total dividends and reports earnings of $118,000. Required: 1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. At the end of 20X4, what is the balance in the investment account?

On 3 January 20X4, Windsor Company purchased 10% of the shares of Brampton for $608,000 cash. Windsor will use the equity method. On this date, Brampton has $1,980,000 of assets, $1,584,000 of liabilities, and $396,000 of equity. Book values reflect fair values except for $895,000 of equipment, which has a five-year life and a fair value of $1,118,750. In 20X4, Brampton pays $35,400 of total dividends and reports earnings of $118,000. Required: 1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. At the end of 20X4, what is the balance in the investment account?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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