On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of$1,435.000 in cash and other consideration. At the acquisition date, Smashing had common stock of $920,000, retainedearnings of $470,000, and a noncontrolling interest fair value of $615,000. Corgan attributed the excess of fair value overSmashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for itsinvestment in Smashing.During the next two years, Smashing reported the following:Net Income2020 $370,0002021 350,000DividendsDeclared$57,00067,000InventoryPurchasesfrom Corgan$320,000340,000Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 percent of thecurrent year purchases remain in Smashing's inventory.a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021.b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing.Complete this question by entering your answers in the tabs below.Required A Required BCompute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021.Instment halanes 120121

An accounting methodology that a business uses to recognize the earnings from its investment in…

On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,435,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $920,000, retained earnings of $470,000, and a noncontrolling interest fair value of $615,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing During the next two years, Smashing reported the following: Inventory Purchases from Corgan Net Income 2020 $370,000 2021 350,000 Dividends Declared $57,000 67,000 $320,000 340,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 percent of the current year purchases remain in Smashing's inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing.

On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,435,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $920,000, retained earnings of $470,000, and a noncontrolling interest fair value of $615,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing During the next two years, Smashing reported the following: Inventory Purchases from Corgan Net Income 2020 $370,000 2021 350,000 Dividends Declared $57,000 67,000 $320,000 340,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 percent of the current year purchases remain in Smashing's inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing.

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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On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,080,000 In cash and other consideration. At the acquisition date, Smashing had common stock of $780,000, retalned earnings of $330,000, and a noncontrolling Interest falr value of $270,000. Corgan attributed the excess of fair value over Smashing's book value to varlous covenants with a 20-year remalning life. Corgan uses the equity method to account for Its Investment in Smashing. During the next two years, Smashing reported the following: Inventory Purchases from Dividends Net Income Declared $43,eee 53,e00 Corgan $180,000 200, 000 2020 $230,000 210,000 2021 Corgan sells Inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remaln in Smashing's Inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Ic., account as of December 31, 2021. b. Prepare the worksheet…
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