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  3. q2: on january 1, 2018, jolley corp. paid $250,000

Q2: On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common...

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Accounting

Q2: On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of Tige was $850,000. A building with a carrying value of $160,000 was actually worth $220,000. The building had a remaining life of twenty years. Tige owned a trademark valued at $90,000 over cost that was to be amortized over 20 years.

During 2018, Tige sold to Jolley inventory costing $60,000, at a markup of 50% on cost. At the end of the year, Jolley still owned some of these goods with an intra-entity selling price of $33,000.

Tige reported net income of $200,000 during 2018. This amount included a extraordinary gain of $35,000. Tige paid dividends totaling $40,000.

  1. Prepare all of Jolleys journal entries for 2018 in relation to Tige Co. Assume the equity method is appropriate for use. (Record initial investment, accrual investment income, amortization, dividend, and URGP if there is any)
  2. What is the investment in Tige would be reported on Jolleys 12/31/2018 financial statements?
  3. If Jolley sold half of its investment in Tige for 400,000 on 1/1/2019, calculate the cost of the investment sold and then report the gain or loss on the sale of investment.

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