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Appropriate journal entries related to the investment

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Reference no: EM13996142

Fizer Pharmaceutical paid $68 million on January 2, 2011, for 4 million shares of Carne Cosmetics common stock. The investment represents a 25% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $1 per share on December 21, 2011, and Carne reported net income of $40 million for the year ended December 31, 2011. The fair value of Carne's common stock at December 31, 2011, was $18.50 per share.

  • The book value of Carne's net assets was $192 million.
  • The fair value of Carne's depreciable assets exceeded their book value by $32 million. These assets had an average remaining useful life of eight years.
  • The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.

Required:

Prepare all appropriate journal entries related to the investment during 2011.

 

Reference no: EM13996142

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