Reference no: EM132493222

On January 1, 2020, Tom Company is considering purchasing a 35 percent ownership interest in Jerry Company, a privately held enterprise, for $900,000. Jerry predicts its profit will be $250,000 in 2020, projects a 3% annual increase in profits (from one year to the next) in each of the next four years, and expects to pay a steady annual dividend of $20,000 for the foreseeable future. Jerry has on its books a patent that is undervalued by $120,000, and has an estimated remaining useful life of 6 years. All of Jerry's other assets and liabilities have book values that approximate market values. Tom uses the equity method for its investment in Jerry.

We need a schedule in Excel for the years 2020 through 2024 to display the following:

Question 1.Tom's equity in Jerry earnings with rows showing these:

Tom's share of Jerry reported income
Amortization expense
Tom's equity in Jerry earnings

Question 2.Tom's Investment in Jerry balance with rows showing the following:

Beginning balance
Equity earnings
Dividends
Ending balance