Reference no: EM132505000
Question - On January 1, 2011, Perelli Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a long-term investment. The purchase price of $4,954,500 was paid in cash. At the purchase date, the balance sheet of Singer Company included the following:
Current assets $2,935,000
Long-term assets 3,884,600
Other assets 758,900
Current liabilities 1,571,600
Common stock, $20 par value 1,998,200
Other contributed capital 1,887,800
Retained earnings 1,614,100
Additional data on Singer Company for the four years following the purchase are:
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2011
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2012
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2013
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2014
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Net income (loss)
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$2,003,400
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$476,800
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($180,500)
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($321,700)
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Cash dividends paid, 12/30
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501,500
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501,500
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501,500
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501,500
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Prepare journal entries under each of the following methods to record the purchase and all investment-related subsequent events on the books of Perelli Company for the four years, assuming that any excess of purchase price over equity acquired was attributable solely to an excess of market over book values of depreciable assets (with a remaining life of 15 years). (Assume straight-line depreciation.)
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