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On January 2, 20x2, Topsail purchased 35% of the outstanding common shares of Ridgeway Corporation,...

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Accounting

On January 2, 20x2, Topsail purchased 35% of the outstanding common shares of Ridgeway Corporation, which affords it significant influence over the company. The shares were purchased for $3,500,000. The book value of the purchased shares was $3,000,000 on January 2nd. 20% of the excess of purchase price over book value was attributed to goodwill with the balance being associated with identifiable assets having a remaining average life of 10 years. Ridgeway paid dividends of $100,000 on December 15, 20X2 and reported income of $140,000 on December 31, 20X2. The fair value of the Ridgeway shares held by Topsail on December 31, 20x2 was $3,900,000
requied
1. On your uploaded scratch paper, provide the entries necessary to record Topsail's investment in Ridgeway Corporation during 20x2
2. indicate the amount at which Topsail should report its investment in Ridgeway Corporation on its December 31, 20X2 balance sheet. Provide your supporting calculation via your scratch paper

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