70.2K

Verified Solution

Link Copied!

Pirate Corporation purchased 100 percent ownership of Ship Company on January 1, 20X5, for $275,000. On that date, the book value of Ship's reported net assets was $215,000. The excess over book value paid is attributable to depreciable assets with a remaining useful life of 10 years. Net income and dividend payments of Ship in the following periods were as shown below: Year 20X5 20X6 20X7 Net Income $ 36,000 56,000 36,000 Dividends $ 16,000 26,000 46,000 Required: Prepare journal entries on Pirate Corporation's books relating to its investment in Ship Company for each of the three years, assuming it accounts for the investment using the equity method. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Pirate Corporation purchased 100 percent ownership of Ship Company on January 1,205, for $275,000. On that date, the book value of Ship's reported net assets was $215,000. The excess over book value paid is attributable to depreciable assets with a remaining useful life of 10 years. Net income and dividend payments of Ship in the following periods were as shown below: Required: Prepare journal entries on Pirate Corporation's books relating to its investment in Ship Company for each of the three years, assuming it accounts for the investment using the equity method. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field

Answer & Explanation Solved by verified expert

See Answer