On July 1,2014,Hilltop Systems acquired 8,000 shares of Accurate Services' 40,000 outstanding common shares at a cost of $240,000.The book value of Accurate's net assets on that date was $880,000.The following data pertain to Accurate Services for 2014:

Any excess of cost over book value is attributable to depreciable properties the market value of which exceeds the carrying value.The remaining life of the equipment is 10 years.
(1)Prepare the entry to record the original investment on July 1.
(2)Prepare the necessary entries (other than acquisition)for 2014 on Hilltop Systems' books using the cost method.
(3)Prepare the necessary entries (other than acquisition)for 2014 on Hilltop Systems' books using the equity method.

Question

On July 1,2014,Hilltop Systems acquired 8,000 shares of Accurate Services' 40,000 outstanding common shares at a cost of $240,000.The book value of Accurate's net assets on that date was $880,000.The following data pertain to Accurate Services for 2014:
  
Any excess of cost over book value is attributable to depreciable properties the market value of which exceeds the carrying value.The remaining life of the equipment is 10 years.
(1)Prepare the entry to record the original investment on July 1.
(2)Prepare the necessary entries (other than acquisition)for 2014 on Hilltop Systems' books using the cost method.
(3)Prepare the necessary entries (other than acquisition)for 2014 on Hilltop Systems' books using the equity method.

Quizplus · Accepted Answer

The Answer of On July 1,2014,Hilltop Systems acquired 8,000 shares of Accurate Services' 40,000 outstanding common shares at a cost of $240,000.The book value of Accurate's net assets on that date was $880,000.The following data pertain to Accurate Services for 2014:
  
Any excess of cost over book value is attributable to depreciable properties the market value of which exceeds the carrying value.The remaining life of the equipment is 10 years.
(1)Prepare the entry to record the original investment on July 1.
(2)Prepare the necessary entries (other than acquisition)for 2014 on Hilltop Systems' books using the cost method.
(3)Prepare the necessary entries (other than acquisition)for 2014 on Hilltop Systems' books using the equity method.

On July 1,2014,Hilltop Systems Acquired 8,000 Shares of Accurate Services