I already know the answer to Question 1, and added it in above. I don\'t underst
ID: 2517564 • Letter: I
Question
I already know the answer to Question 1, and added it in above. I don't understand how the answer to #2, is not simply 225,000, because the problem states that Dividends were only paid in 2009. So, it is kinda difficult for me to see any answer that is not simply 225,000.
Vision Corporation acquired 75 percent of the stock of Meta Company on January 1, 2007, for $225,000. At that date, the fair value of the noncontrolling interest was S75,000 On January 1, 2009, Vision sold 1,500 shares of Meta's $10 par value shares for S60,000 in cash. Meta s balance sheet at the time of the sale contained the following amounts Cash Accounts Receivable Inventory Buildings and Equipment(net ) $40,000 Accounts Payable 40,000 Bonds Payable 20,000 Common Stock --Retained Earnings $50,000 50,000 100,000 20 Total Assets $400,000 $400,000 During the year of 2009 Meta reported net income of S30,000 and paid dividends of $10,000 Vision used the fully adjusted equity method in accounting for its ownership of Meta Company Ownership Position at Acquisition Ownership Position at Sale Vision-6000-6090 NCI- 4000-4090 10,000 100 Vision-7500-75% NCI- 2500-25% 10.000 100% 2. 3. 4. Prepare the eliminating entries for 12/31/09 Compute the balance in the investment account reported by Vision on 1/1/09 before the sale Prepare the entry recorded by Vision to record the sale of the shares assuming excess of the sale price over the carrying value is recorded as an increase in Paid in Capital.Explanation / Answer
2. Compute the balance in the investment account reported by vision on 1/1/09 before the sale.
$225,000 + $30,000 = $255,000
3. Prepare the entry recorded by Vision to record the sale of the shares assuming excess of the sale price over the carrying value is recorded as an increase in Paid in Capital.
Additional Paid-in Capital will be credited for $9,000
4. Prepare the eliminating entries for 12/31/09
Investment in Meta Stock at January 1, 2009, will be credited for: $204000
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