Accountancy
Calvin obtained 50% of the shares of Harris and obtained joint control of Harris on January 1, 2020 for $500,000 in cash. The other 50% equity holder also put $500,000 of cash into Harris on January 1, 2020. Both Calvin and Haris have a December 31, 2020 year end. Harris had limited activity during the year. Harris only conducted three transactions during the year: • On January 1, 2020, Harris paid $50,000 in cash for equipment. The equipment has a useful life of 4 years. • On March 10, 2020, Harris paid legal fees of $150,000 in cash • On December 20, 2020, Harris generated service revenue of $250,000 in cash.
Required
A) Prepare all the journal entries for Calvins’ investment in Harris for the year ended December 31, 2020, assuming that the investment in Harris is a joint venture.
B) Prepare all the journal entries for Calvins’ investment in Harris for the year ended December 31, 2020, assuming that the investment in Harris is a joint operation.
Homework Answers
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