On January Corgan Company acquired percent of the outstanding voting stock of Smashing, Incorporated, for a total of $ in cash and other consideration. At the acquisition date, Smashing had common stock of $ retained earnings of $ and a noncontrolling interest fair value of $ Corgan attributed the excess of fair value over Smashing's book value to various covenants with a year remaining life. Corgan uses the equity method to account for its investment in Smashing.
During the next two years, Smashing reported the following:
Items Net Income Dividends Declared Inventory Purchases from Corgan
$ $ $
Corgan sells inventory to Smashing using a percent markup on cost At the end of and percent of the current year purchases remain in Smashing's inventory.
Required:
Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December
Prepare the worksheet adjustments for the December consolidation of Corgan and Smashing.
