Reference no: EM132815402
Question - On January 1, 2019, Husky acquired 80% of the outstanding voting stock of Cougar for a total of $2,200,000 in cash and other consideration. At that time, Cougar had Common Stock of $500,000 and Retained Earnings of $1,800,000, and a Noncontrolling Interest value of $550,000. Husky attributed the excess of fair value over Cougar's book value to Patents with a 10-year remaining life. Husky uses the Equity Method to account for its investment in Cougar.
During the next two years, Cougar reported the following:
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Net Income
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Dividends
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Purchases from Husky
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2019
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$250,000
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$100,000
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$150,000
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2020
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$300,000
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$125,000
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$165,000
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Husky Sells inventory to Cougar on a 50% mark up on cost. At the end of both 2019 and 2020, 20% of the intra-entity sales above remained in ending inventory.
Required -
1. Compute the balance in Husky's Investment in Cougar as of December 31, 2020 based on its application of the Equity Method.
2. Prepare the following worksheet adjustments that would be required in a December 31, 2020 consolidation of Husky and Cougar.
- Entry *G
- Entry S
- Entry A
- Entry I
- Entry D
- Entry E
- Entry TI
- Entry G
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