Reference no: EM132509519
Question - George Corporation paid $220,000 for 45% of Washington Corporation's outstanding voting common stock on July 1, 2018. Washington's stockholders' equity on January 1, 2018 was $240,000 consisting of $140,000 capital stock and $100,000 retained earnings. During 2018, Washington reported net income of $60,000 and on October 1, 2018, Washington declared dividends of $22,000. Washington's assets and liabilities were stated at fair values on July 1, 2018 except for land that was undervalued by $20,000 and equipment with a five-year remaining useful life that was undervalued by $15,000.
Requirements -
1. Perform calculations to determine: excess of fair value over book value for the initial investment in Washington. 2 Do a schedule to assign the excess of cost over book value
3. Prepare amortization schedule for the cost/book value differences
4. Prepare all the journal entries that will be recorded on the books of George Company to account for this investment.
5. Provide the calculation of the Investment in Washington Account at December 31, 2018.
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