Purple Corporation owns 80 percent of Corn Corporation\'s common stock. It purch

Question

Purple Corporation owns 80 percent of Corn Corporation's common stock. It purchased the shares on January 1, 20X1, for $520,000. At the date of acquisition, the fair value of the noncontrolling interest was $130,000, and Corn reported common stock outstanding of $400,000 and retained earnings of $200,000 reported income from operations of $60,000 and paid dividends of $25,000 Corn purchased 70 percent ownership of Bark Company on January 1, 20X3, for $406,000. At that date, the fair value of the noncontrolling interest was $174,000, and Bark reported common stock outstanding of $250,000 and retained earnings of $300,000. In 20X3, Bark reported net income of $30,000 and paid dividends of $20,000. The differential is assigned to buildings and equipment with an economic life of 10 years at the date of acquisition.

Explanation / Answer

Date Account Debit Credit Jan.1 20X3 Investment in bark company 406000 Cash 406000 [ Invested in 70% coomon stock of bark company]

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