On January 2, 2021 Cornwall Corporation acquired 40% of the voting stock of Kingston Company for $4,000,000 in cash, when Kingston's total book value was $20,000,000. The basis difference was attributed to goodwill. During 2021 Kingston reported total net income of $700,000 and declared and paid total dividends of $100,000. Kingston also reported an other comprehensive loss of $5,000. Kingston sells merchandise to Cornwall at a markup of 20% on cost; $360,000 remains in Cornwall's ending inventory. Cornwall uses the equity method to report its investment in Kingston.
Required a. Compute Cornwall's equity in net income and equity in other comprehensive income of Kingston for 2021, reported on Cornwall's statement of comprehensive income.
b. Make the journal entry or entries necessary to report the investment in Kingston on Cornwall's books for 2021.

Question

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The Answer of On January 2, 2021 Cornwall Corporation acquired 40% of the voting stock of Kingston Company for $4,000,000 in cash, when Kingston's total book value was $20,000,000. The basis difference was attributed to goodwill. During 2021 Kingston reported total net income of $700,000 and declared and paid total dividends of $100,000. Kingston also reported an other comprehensive loss of $5,000. Kingston sells merchandise to Cornwall at a markup of 20% on cost; $360,000 remains in Cornwall's ending inventory. Cornwall uses the equity method to report its investment in Kingston.
Required a. Compute Cornwall's equity in net income and equity in other comprehensive income of Kingston for 2021, reported on Cornwall's statement of comprehensive income.
b. Make the journal entry or entries necessary to report the investment in Kingston on Cornwall's books for 2021.

On January 2, 2021 Cornwall Corporation Acquired 40% of the Voting