Answer and Explanation:
Entry S
Dr Common Stock-Carper Inc.420,000
DrRetained Earnings, 1/1/15- Carper Inc. 375,200
Cr Investment in Carper Inc. (70%)556,640
Cr Non-controlling Interest in Carper Inc., 1/1/15238,560
Entry A
Dr Building (28,000 less 2 yrs. Depreciation.)22,400
Dr Copyright (80,000 less 2 yrs. Amort.)72,000
Dr Goodwill140,000
Cr Investment in Carper Inc.170,080
Cr Non-controlling Interest64,320
Entry I
Dr Equity in Subsidiary Earnings103,040
Cr Investment in Carper Inc.103,040
Entry D
Dr Investment in Carper Inc.58,800
Cr Dividends Paid58,800
Entry E
Dr Depreciation Expense2,800
Dr Amortization Expense4,000
Cr Buildings2,800
Cr Copyright4,000
Entry P
Dr Accounts Payable30,800
Cr Accounts receivable30,800
Non-controlling Interest items:
Dividends(25,200)
Income of Carper44,160
Beginning NCI = $270,000 + $29,460 (income) – $16,380 (divs) + $38,280 (income) – $18,480 (divs) = $302,880
Goodwill: Vacker paid $650,000 which includes $20,000 premium. Thus, $630,000 represents 70% of the shares without the premium. $630,000/.70 =900,000
The acquisition value which is $28,000 was allocated based on the fair value of the building. With a ten-year remaining life, amortization will be $2,800 per year of which $1,960 is attributed to the controlling interest.Copyright amortization would have been $4,000 per year of which $2,800 is attributed to the controlling interest.
