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On January 2, 2020, Chapman Utensil Inc. purchased 480,000 shares of Justin Spoon Corp.s common stock at $33.15 per share. The investment represented a 32% ownership interest that gave Chapman Utensil the ability to influence the financial and operating policies of Justin Spoon Corp. Chapman Utensil did not elect the fair value option to account for its investment.

a. Prepare the general journal entry recorded by Chapman Utensil Inc. on January 2, 2020 to recognize its investment in Justin Spoon Corp. Post the entry to the relevant T-account below. (4 points)

DATE	ACCOUNT NAMES		DEBIT	CREDIT

SUPPORTING CALCULATION REQUIRED:

An analysis of Justin Spoons net identifiable assets at December 31, 2018, revealed:

	Book Value	Fair Value
Current Assets	$37,800,000	$37,800,000
Plant Assets	134,000,000	139,000,000
Intangible Assets Other than Goodwill	9,000,000	17,000,000
Current Liabilities	27,600,000	27,600,000
Long-Term Liabilities	130,000,000	130,000,000
Common Stock	2,000,000
Additional Paid-In Capital	8,000,000
Retained Earnings	11,900,000
Accumulated Other Comprehensive Income	1,300,000

The plant assets and intangible assets other than goodwill were estimated to have average remaining useful lives of 10 years and 8 years, respectively.

b. Use the following table to 1) compute the total purchase price differential; 2) allocate the differential to the net identifiable assets, and; 3) determine the portion of the purchase price paid by Chapman Utensil Inc. for its share of Justin Spoon Corp. attributable to goodwill.

(12 points)

Computation and Allocation of Purchase Price Differential:
		Total	Investors %	Investors Total
Purchase Price Shares
Carrying Value of Net Assets Acquired
Total Purchase Price Differential
Allocation to Net Identifiable Assets:

c. Use the following table to compute the amount of amortization of the purchase price differential paid for Justin Spoon Corp. that Chapman Utensil must record as an adjustment for the year ended December 31, 2020. (6 points)

	Investors Additional Cost	Remaining Useful life	Annual Amortization
Plant Assets
Intangible Assets
Goodwill
		Total

During 2020, Justin Spoon reported net earnings of $5,540,000 and other comprehensive income of $650,000. The Company paid dividends of $2,790,000. The fair value of Justin Spoon Corp.s common stock was $38.50 per share at December 31, 2020.

d. Prepare the entries recorded by Chapman Utensils share of the net earnings and other comprehensive income of Justin Spoon and the adjustment to fair value, if necessary. (12 points)

DATE	ACCOUNT NAMES		DEBIT	CREDIT

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