On January 1, 2017, Fisher Corporation purchased 40 percent(74,000 shares) of the common stock of Bowden, Inc. for $978,000 incash and began to use the equity method for the investment. Theprice paid represented a $66,000 payment in excess of the bookvalue of Fisher's share of Bowden's underlying net assets. Fisherwas willing to make this extra payment because of a recentlydeveloped patent held by Bowden with a 15-year remaining life. Allother assets were considered appropriately valued on Bowden'sbooks.
Bowden declares and pays a $90,000 cash dividend to itsstockholders each year on September 15. Bowden reported net incomeof $400,000 in 2017 and $352,000 in 2018. Each income figure wasearned evenly throughout its respective year.
On July 1, 2018, Fisher sold 10 percent (18,500 shares) ofBowden's outstanding shares for $320,000 in cash. Although it soldthis interest, Fisher maintained the ability to significantlyinfluence Bowden's decision-making process.
Prepare the journal entries for Fisher for the years of 2017 and2018. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field. Donot round intermediate calculations. Round your final answers tothe nearest whole dollar.)
Record cost of 74,000 shares of Bowden Company.â
Record the annual dividend declared and received fromBowden.
Record accrue 2017 income based on 40% ownership of Bowden.
Record amortization of $66,000 excess patent fair value[indicated in problem] over 15 years.
Record the entry to accrue ½ year income of 40% ownership.
Record ½ year amortization of patent to establish correct bookvalue for investment as of 7/1/18.
Record 18,500 shares of Bowden Company sold; investment basiscomputed below.
Record annual dividend declared and received.
Record ½ year income based on remaining 30% ownership.
Record ½ year of patent amortization.
On January 1, 2017, Fisher Corporation purchased 40 percent(74,000 shares) of the common stock of Bowden, Inc. for $978,000 incash and began to use the equity method for the investment. Theprice paid represented a $66,000 payment in excess of the bookvalue of Fisher's share of Bowden's underlying net assets. Fisherwas willing to make this extra payment because of a recentlydeveloped patent held by Bowden with a 15-year remaining life. Allother assets were considered appropriately valued on Bowden'sbooks.
Bowden declares and pays a $90,000 cash dividend to itsstockholders each year on September 15. Bowden reported net incomeof $400,000 in 2017 and $352,000 in 2018. Each income figure wasearned evenly throughout its respective year.
On July 1, 2018, Fisher sold 10 percent (18,500 shares) ofBowden's outstanding shares for $320,000 in cash. Although it soldthis interest, Fisher maintained the ability to significantlyinfluence Bowden's decision-making process.
Prepare the journal entries for Fisher for the years of 2017 and2018. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field. Donot round intermediate calculations. Round your final answers tothe nearest whole dollar.)
Record cost of 74,000 shares of Bowden Company.â
Record the annual dividend declared and received fromBowden.
Record accrue 2017 income based on 40% ownership of Bowden.
Record amortization of $66,000 excess patent fair value[indicated in problem] over 15 years.
Record the entry to accrue ½ year income of 40% ownership.
Record ½ year amortization of patent to establish correct bookvalue for investment as of 7/1/18.
Record 18,500 shares of Bowden Company sold; investment basiscomputed below.
Record annual dividend declared and received.
Record ½ year income based on remaining 30% ownership.
Record ½ year of patent amortization.
