On January 1, 2015, Coca-Cola and another company jointly acquired Argo Natural Juices. Each acquiring company paid $10 million to acquire 50% of Argo. At the date of acquisition, Argo's book value was $6 million, consisting of $2 million in capital stock, $3.7 million in retained earnings, and 0.3 million in accumulated other comprehensive income. The basis difference was attributed entirely to goodwill. It is now December 31, 2020. Argo reported net income of $240,000, other comprehensive income of $10,000, and declared and paid cash dividends of $40,000 in 2020. Coca-Cola treats Argo as an equity method investment. Argo's balance sheet at December 31, 2020, is as follows (in thousands):
Required a. Prepare Coca-Cola's 2020 entries related to its investment in Argo.
b. Calculate the ending balance in Investment in Argo, appearing on Coca-Cola's December 31, 2020 balance sheet.

Question

On January 1, 2015, Coca-Cola and another company jointly acquired Argo Natural Juices. Each acquiring company paid $10 million to acquire 50% of Argo. At the date of acquisition, Argo's book value was $6 million, consisting of $2 million in capital stock, $3.7 million in retained earnings, and 0.3 million in accumulated other comprehensive income. The basis difference was attributed entirely to goodwill. It is now December 31, 2020. Argo reported net income of $240,000, other comprehensive income of $10,000, and declared and paid cash dividends of $40,000 in 2020. Coca-Cola treats Argo as an equity method investment. Argo's balance sheet at December 31, 2020, is as follows (in thousands):
  Required a. Prepare Coca-Cola's 2020 entries related to its investment in Argo.
b. Calculate the ending balance in Investment in Argo, appearing on Coca-Cola's December 31, 2020 balance sheet.

Quizplus · Accepted Answer

The Answer of On January 1, 2015, Coca-Cola and another company jointly acquired Argo Natural Juices. Each acquiring company paid $10 million to acquire 50% of Argo. At the date of acquisition, Argo's book value was $6 million, consisting of $2 million in capital stock, $3.7 million in retained earnings, and 0.3 million in accumulated other comprehensive income. The basis difference was attributed entirely to goodwill. It is now December 31, 2020. Argo reported net income of $240,000, other comprehensive income of $10,000, and declared and paid cash dividends of $40,000 in 2020. Coca-Cola treats Argo as an equity method investment. Argo's balance sheet at December 31, 2020, is as follows (in thousands):
  Required a. Prepare Coca-Cola's 2020 entries related to its investment in Argo.
b. Calculate the ending balance in Investment in Argo, appearing on Coca-Cola's December 31, 2020 balance sheet.

On January 1, 2015, Coca-Cola and Another Company Jointly Acquired