Prepare the journal entries made by mcdonald inc

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McDonald Inc.

On January 3, 2011, McDonald Inc. purchased 40% of the outstanding common stock of Old Farms Co., paying $128,000 when the book value of the net assets of Old Farms equaled $250,000. The difference was attributed to equipment, which had a book value of $60,000 and a fair value of $100,000, and to buildings, with a book value of $50,000 and a fair value of $80,000. The remaining useful life of the equipment and buildings was four years and 12 years, respectively. During 2011, Old Farms reported net income of $80,000 and paid dividends of $50,000.

Prepare the journal entries made by McDonald Inc. during 2011 related to its investment in Old Farms.

Reference no: EM131086987

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