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Palmer Corporation acquired 70 percent of Krown Corporation’s ownership on January 1, 20X8, for $149,800. At...

Palmer Corporation acquired 70 percent of Krown Corporation’s ownership on January 1, 20X8, for $149,800. At that date, Krown reported capital stock outstanding of $127,000 and retained earnings of $87,000, and the fair value of the noncontrolling interest was equal to 30 percent of the book value of Krown. During 20X8, Krown reported net income of $34,200 and comprehensive income of $40,200 and paid dividends of $29,200.

   

Present all equity-method entries that Palmer would have recorded in accounting for its investment in Krown during 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

a. Record the initial investment in Krown Corp

b. Record Palmer Corp.'s 70% share of Krown Corp.'s 20X8 income.

c. Record Palmer Corp.'s 70% share of Krown Corp.'s 20X8 dividend.

d. Record Palmer Corp.'s proportionate share of OCI from Krown Corp.

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Answer #1
No. Account titles debit credit
a Investment in krown corp 149800
cash 149800
b Investment in Krown corp 23940
income from Krown Corp 23940
34200*0.7
c Cash 20440
Investment in Krwon corp 20440
29200*0.7
d Investment in Krown Corp 4200
Other comprehensive income from Krown corp 4200
(40200-34200)*0.7
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