On July 1, 2018, Clearwater Inc. purchased 6,000 shares of the outstanding common stock of Mountain Corporation at a cost of $140,000. Clearwater will have significant influence over the financial and operating policies of Mountain. Mountain had 30,000 shares of outstanding common stock. Assume the total book value and fair value of net assets is $650,000. Both companies have a January through December fiscal year. The following data pertains to Mountain Corporation during 2018: $\begin{array}{ll}
\text { Dividends declared and paid, Jan. 1-June 30 } & \$ 12,000 \
\text { Dividends declared and paid, Jul. 1-Dec. 31 } & \$ 12,000
\end{array}$ Net Income, January 1 - June $ 30 \quad \$ 14,000 $
Net Income, July 1 -December $ 31 \quad \$ 18,000 $ Required:
(1.) Prepare the entry to record the original investment in Mountain.
(2.) Compute the goodwill (if any) on the acquisition.
(3.) Prepare the necessary entries (other than acquisition) for 2018 under the equity method.

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The Answer of On July 1, 2018, Clearwater Inc. purchased 6,000 shares of the outstanding common stock of Mountain Corporation at a cost of $140,000. Clearwater will have significant influence over the financial and operating policies of Mountain. Mountain had 30,000 shares of outstanding common stock. Assume the total book value and fair value of net assets is $650,000. Both companies have a January through December fiscal year. The following data pertains to Mountain Corporation during 2018: $\begin{array}{ll}
\text { Dividends declared and paid, Jan. 1-June 30 } & \$ 12,000 \
\text { Dividends declared and paid, Jul. 1-Dec. 31 } & \$ 12,000
\end{array}$ Net Income, January 1 - June $ 30 \quad \$ 14,000 $
Net Income, July 1 -December $ 31 \quad \$ 18,000 $ Required:
(1.) Prepare the entry to record the original investment in Mountain.
(2.) Compute the goodwill (if any) on the acquisition.
(3.) Prepare the necessary entries (other than acquisition) for 2018 under the equity method.

On July 1, 2018, Clearwater Inc Net Income, January 1 - June