What is the balance of the investment account in Cookie

Reference no: EM132822963

Question - On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie. In 1/1/2016, Choco acquired additional 20% of the voting common stock of Cookie for $210,000.

Following is the financial information about Cookie.

Book value of net assets 1/1/2015 $800,000

Net income (2015) $180,000

Net income (2016) $210,000

Dividends (2015) $80,000

Dividends (2016) $100,000

Land undervalued 12/31/2015 $60,000

Land undervalued 12/31/2016 $70,000

All excess payment will be recorded using Trademark which has useful life of 9 years in 2016.

During the year, there was no fair market value adjustment for Cookie.

Q1: In 2015, what method should be used to record this investment?

Q2: What is the balance of the investment account in Cookie at 12/31/2015?

Q3: What is the journal entry to record for dividends paid by Cookie at 12/31/2015?

Q4: In 2016, after additional 20% acquisition of Cookie, what method should be used to record this investment for 2015 and 2016?

Q5: Calculate trademark in 2015 that will be recorded in 2016 (if any).

Q6: Calculate annual amortization of under/overvalued asset and Trademark in 2015.

Reference no: EM132822963

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