I need help with an accounting problem it is exercise 5-11 (workpaper entries for three years) lo6 Advanced accounting.
I am required to 3. Assumed to use of the complete equity method.
The question is On January 1, 2010, Piper Company acquired 80% interest in Sand Company for $2,276,000. At that time the capital stock and retained earnings of Sand Company were $1,800,000 and $700,000, respectively. Differences between fair calue and the book value of the indengifiable assets of sand company were as follows:
Fair Value in Excess of Book value
Equipment (net) 50,000
The book values of all other assets and liabilities of Sand Company were equal to their fair values on january 1, 2010. The equipment had a remaining useful life of 8 years. Inventory accounted for on a FIFO basis. Sand Company's reported net income and declared dividends for 2010 through 2012 are shown here:
2010 2011 2012
Net Income 100,000 150,000 80,000
Dividends 20,000 30,000 15,000