Goff Corporation acquired stock of Spiegel, Inc., on March 1. 2016, at a cost of

Question

Goff Corporation acquired stock of Spiegel, Inc., on March 1. 2016, at a cost of $500,000. The stock had a fair value of $550,000 at December 31, 2016, $610,000 at December 31, 2017, and $590,000 at December 31, 2018. Goff sold the stock for $640,000 on July 1 2019. Spiegel did not pay any dividends during the time Goff held the stock. When Goff acquired the stock, It classfied the investment as available-for-sale. However, Goff ranstioned to the new accounting rules for minority-passive equity investments at the beginning of 2018. Ignore income taxes. Assume the amount credited to OCI each year was subsequently closed to AOCI during the closing process. Required 1. Prepare the journal entry to record the acquisition of the Splegel stock at March 1, 2016. 2. Prepare the journal entry to record the fair value adjustment at December 31, 2016. 3. Prepare the journal entry to record the fair value adjustment at December 31, 2017 epare the journal entry to record the transition to the new accounting for minority- passive investments at January 1. 2018. 6. Prepare the journal entry to record the sale of the investment at July 1. 2019. (For all requirements, if no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

1.

March 01,2006 Spiegel Inc A/c Dr. 500,000

To Cash A/c 500,000

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Thanks & Regards

Aditya Aggarwal

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