PROBLEM

Hug Company acquires 60% of Corpuz Company for $340,000 cash on January 1, 2017. Corpuz reported

common stock of $55,000 and retained earnings of $125,000 on that date.

Corpuzs equipment (life 10 years) was undervalued by $80,000. Land was undervalued by $8,000.

Building (life 15 years) was undervalued by $30,000. Any excess consideration transferred over fair value was

attributed to goodwill with an indefinite life.

Based on an annual review, goodwill was impaired by $10,000 at December 31, 2017 and an additional $2,000 on

December 31, 2018. No further impairment was noted.

Corpuz earns income and pays dividends as follows:

2017 2018 2019

Net income $60,000 $70,000 $50,000

Net income - last 6 months

Dividends $40,000 $30,000 $20,000

Hug uses the acquisition method and the full equity method for its investments.

Assignment:

Prepare all journal entries on Hugs accounting records to account for the activity of Corpuz for each year (2017, 2018, and 2019). This should include the acquisition.

Prepare the consolidation/elimination/reclassification entries on the consolidation worksheet at January 1, 2017, December 31, 2017, December 31, 2018 and December 31, 2019.

Compute Hug's general ledger investment in Corpuz at January 1, 2017, December 31, 2017, December 31, 2018 and December 31, 2019. Show in T account format

Compute the amount Hug records as Income from Corpuz for the years ended December 31, 2017, December 31, 2018, and December 31, 2019.

Compute the Non-controlling interest in the Net Income of Corpuz at December 31, 2017 December 31, 2018 and December 31, 2019. Show in T account format

Compute the Non-Controlling Interest in Net Assets (consolidated balance sheet) in Corpuz at January 1, 2017, December 31, 2017, December 31, 2018 and December 31, 2019. Show in T account format.