On January 1,2009,Vacker Co.acquired 70% of Carper Inc.by paying $650,000.This included a $20,000 control premium.Carper reported common stock on that date of $420,000 with retained earnings of $252,000.A building was undervalued in the company's financial records by $28,000.This building had a ten-year remaining life.Copyrights of $80,000 were to be recognized and amortized over 20 years.
Carper earned income and paid cash dividends as follows: $\begin{array}{ccccc}
&\text { Net } &\text { Dividends } \
&\underline{\text { Income }}&\underline{\text { Paid}}\
2009 & \$ 105,000 &\$54,600\
2010 & 134,400& \$ 4,400 \
2011 & 154,000 & 61,600 \
\end{array}$

On December 31,2011,Vacker owed $30,800 to Carper.There have been no changes in Carper's common stock account since the acquisition.
Required:
If the equity method had been applied by Vacker for this acquisition,what were the consolidation entries needed as of December 31,2011?

Question

On January 1,2009,Vacker Co.acquired 70% of Carper Inc.by paying $650,000.This included a $20,000 control premium.Carper reported common stock on that date of $420,000 with retained earnings of $252,000.A building was undervalued in the company's financial records by $28,000.This building had a ten-year remaining life.Copyrights of $80,000 were to be recognized and amortized over 20 years.
Carper earned income and paid cash dividends as follows: $\begin{array}{ccccc} 
&\text { Net } &\text { Dividends } \
&\underline{\text { Income }}&\underline{\text { Paid}}\
2009 & \$ 105,000 &\$54,600\
2010 &  134,400& \$ 4,400 \
2011 & 154,000 & 61,600 \
\end{array}$

On December 31,2011,Vacker owed $30,800 to Carper.There have been no changes in Carper's common stock account since the acquisition.
Required:
If the equity method had been applied by Vacker for this acquisition,what were the consolidation entries needed as of December 31,2011?

Quizplus · Accepted Answer

The Answer of On January 1,2009,Vacker Co.acquired 70% of Carper Inc.by paying $650,000.This included a $20,000 control premium.Carper reported common stock on that date of $420,000 with retained earnings of $252,000.A building was undervalued in the company's financial records by $28,000.This building had a ten-year remaining life.Copyrights of $80,000 were to be recognized and amortized over 20 years.
Carper earned income and paid cash dividends as follows: $\begin{array}{ccccc} 
&\text { Net } &\text { Dividends } \
&\underline{\text { Income }}&\underline{\text { Paid}}\
2009 & \$ 105,000 &\$54,600\
2010 &  134,400& \$ 4,400 \
2011 & 154,000 & 61,600 \
\end{array}$

On December 31,2011,Vacker owed $30,800 to Carper.There have been no changes in Carper's common stock account since the acquisition.
Required:
If the equity method had been applied by Vacker for this acquisition,what were the consolidation entries needed as of December 31,2011?

On January 1,2009,Vacker Co On December 31,2011,Vacker Owed $30,800 to Carper