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Homework answers / question archive / Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $377,100
Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $377,100. At the time of purchase, Song Company's total stockholders' equity amounted to $459,000. Income and dividend distributions for Song Company from 2014 through 2016 are as follows:
2014 2015 2016
Net Income (loss) $61,600 $53,100 ($56,000 )
Dividend distribution 25,000 51,400 36,700
Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to account for its investment in Song Company under each of the following assumptions:
Percy Company uses the complete equity method to record its investment. The difference between book value of equity acquired and the value implied by the purchase price was attributed solely to an excess of market over book values of depreciable assets, with a remaining life of 10 years.
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