The following balances were taken from the records of S Company: Common stock (1

Question

The following balances were taken from the records of S Company:

Common stock (1/1/11 and 12/31/11) $720,000
Retained earnings 1/1/11 $160,000
Net income for 2011 180,000
Dividends declared in 2011 (40,000)
Retained earnings, 12/31/11 300,000
Total stockholders' equity on 12/31/11 $1,020,000

P Company purchased 25% of S Company's common stock on January 1, 2011 for $300,000 for cash. The difference between implied value and book value is attributable to fixed assets with a remaining useful life on January 1, 2011 of ten years.

P can exert significant influence over S.

Required:

Explanation / Answer

I believe the entry is a debit to Investment in S Company and a credit to Cash, both in the amount of $300,000.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.