Linton Inc.purchased 75% of Marsh Inc.on January 1,2002 for $1,000,000.Marsh's common stock and retained earnings were worth $400,000 each on that date.The acquisition differential was allocated as follows:
The balance was allocated to goodwill.The trademark had an estimated remaining useful life of 10 years from the date of acquisition.Marsh Inc.uses straight line amortization.
In 2002,Marsh's net income was $40,000.Marsh paid $5,000 in dividends to shareholders on record as at December 31,2002.In 2003,Marsh reported a net income of $8,000 and declared $1,000 in dividends.
Required:
a)Prepare the equity method journal entries for Linton for 2002 and 2003.
b)Calculate the value of Marsh's trademark as at December 31,2003.
c)Prepare a statement that shows the changes in Linton's non-controlling interest in 2003.

Question

Linton Inc.purchased 75% of Marsh Inc.on January 1,2002 for $1,000,000.Marsh's common stock and retained earnings were worth $400,000 each on that date.The acquisition differential was allocated as follows:  
The balance was allocated to goodwill.The trademark had an estimated remaining useful life of 10 years from the date of acquisition.Marsh Inc.uses straight line amortization.
In 2002,Marsh's net income was $40,000.Marsh paid $5,000 in dividends to shareholders on record as at December 31,2002.In 2003,Marsh reported a net income of $8,000 and declared $1,000 in dividends.
Required: 
a)Prepare the equity method journal entries for Linton for 2002 and 2003.
b)Calculate the value of Marsh's trademark as at December 31,2003.
c)Prepare a statement that shows the changes in Linton's non-controlling interest in 2003.

Quizplus · Accepted Answer

The Answer of Linton Inc.purchased 75% of Marsh Inc.on January 1,2002 for $1,000,000.Marsh's common stock and retained earnings were worth $400,000 each on that date.The acquisition differential was allocated as follows:  
The balance was allocated to goodwill.The trademark had an estimated remaining useful life of 10 years from the date of acquisition.Marsh Inc.uses straight line amortization.
In 2002,Marsh's net income was $40,000.Marsh paid $5,000 in dividends to shareholders on record as at December 31,2002.In 2003,Marsh reported a net income of $8,000 and declared $1,000 in dividends.
Required: 
a)Prepare the equity method journal entries for Linton for 2002 and 2003.
b)Calculate the value of Marsh's trademark as at December 31,2003.
c)Prepare a statement that shows the changes in Linton's non-controlling interest in 2003.