Puddle Incorporated purchased an 80% interest in Soake Company, located in England. Puddle paid $1,560,000 on January 1, 2014, at a time when the book values of Soake equaled the fair values. Any excess cost/book value differential was attributed to a patent with a five-year remaining useful life. Soake's books are kept in the functional currency, pounds. A summary of Soake's equity is shown below for the first year that Puddle had ownership interest.
Required:
Determine Puddle's income from Soake for 2014, and the balance of Puddle's Investment in Soake account at December 31, 2014. Soake's books are kept in pounds, which is the functional currency.

Question

Puddle Incorporated purchased an 80% interest in Soake Company, located in England. Puddle paid $1,560,000 on January 1, 2014, at a time when the book values of Soake equaled the fair values. Any excess cost/book value differential was attributed to a patent with a five-year remaining useful life. Soake's books are kept in the functional currency, pounds. A summary of Soake's equity is shown below for the first year that Puddle had ownership interest.
  Required:
Determine Puddle's income from Soake for 2014, and the balance of Puddle's Investment in Soake account at December 31, 2014. Soake's books are kept in pounds, which is the functional currency.

Quizplus · Accepted Answer

The Answer of Puddle Incorporated purchased an 80% interest in Soake Company, located in England. Puddle paid $1,560,000 on January 1, 2014, at a time when the book values of Soake equaled the fair values. Any excess cost/book value differential was attributed to a patent with a five-year remaining useful life. Soake's books are kept in the functional currency, pounds. A summary of Soake's equity is shown below for the first year that Puddle had ownership interest.
  Required:
Determine Puddle's income from Soake for 2014, and the balance of Puddle's Investment in Soake account at December 31, 2014. Soake's books are kept in pounds, which is the functional currency.

Puddle Incorporated Purchased an 80% Interest in Soake Company, Located