On 1 January 20X5, Zan Company purchased 8,000 of the 32,000 outstanding common shares of...
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Accounting
On 1 January 20X5, Zan Company purchased 8,000 of the 32,000 outstanding common shares of Woo Computer Corp. (WC) for $152,000 cash. Zan had significant influence as a result of the investment and will use the equity method to account for the investment.
On 1 January 20X5, the statement of financial position of WC showed the following book values (summarized):
Assets not subject to depreciation$190,100*
Assets subject to depreciation (net)152,000**
Liabilities50,500
Common shares227,300
Retained earnings63,100
*Fair value, $215,600; difference relates to land.
**Fair value, $177,500, estimated remaining life, 5 years.
Assume there is no impairment of goodwill. Additional subsequent data on WC are as follows:
20X520X6
Earnings$50,500$66,500
Cash dividends declared and paid40,50056,500
Fair value per share$20$40
Required:
1-1. Provide the investor's entries or give the required information for: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. Entry at date of acquisition.
c. Entries at 31 December 20X5 to recognize investment revenue and dividends.
d. Entries at 31 December 20X6 to recognize investment revenue and dividends.
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