Roller Corporation purchased 100 percent ownership of Steam Company on January 1, 20X5, for $288,000. On...

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Roller Corporation purchased 100 percent ownership of SteamCompany on January 1, 20X5, for $288,000. On that date, the bookvalue of Steam’s reported net assets was $211,000. The excess overbook value paid is attributable to depreciable assets with aremaining useful life of 10 years. Net income and dividend paymentsof Steam in the following periods were
  Year Net Income Dividends
  20X5 $ 25,000 $ 6,000
  20X6 45,000 16,000
  20X7 25,000 37,000
Required:
a.
Prepare journal entries on Roller Corporation’s books relatingto its investment in Steam Company for each of the three years,assuming it accounts for the investment using the cost method. (Ifno entry is required for a transaction/event, select "No journalentry required" in the first account field.)
b.
Prepare journal entries on Roller Corporation’s books relatingto its investment in Steam Company for each of the three years,assuming it accounts for the investment using the equity-method.(If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field.)
Record the purchase of Steam Company stock for 20X5.
Record the dividend from Steam Company for 20X5.
Record the equity-method income for 20X5.
Record the amortization of differential value for 20X5.
Record the dividend from Steam Company for 20X6.
Record the equity-method income for 20X6.
Record the amortization of the differential value for 20X6.
Record the dividend from Steam Company for 20X7.
Record the equity-method income for 20X7.
Record the amortization of the differential value for 20X7.

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a Date Account Titles Explanation Debit Credit 2005 Investment in Steam Company Stock 288000 Cash 288000 For recording investment in Steam company Cash 6000 Dividend Income 6000 For recording receipt of dividend income 2006 Cash 16000 Dividend Income 16000 For recording receipt of dividend income 2007 See Answer

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Roller Corporation purchased 100 percent ownership of SteamCompany on January 1, 20X5, for $288,000. On that date, the bookvalue of Steam’s reported net assets was $211,000. The excess overbook value paid is attributable to depreciable assets with aremaining useful life of 10 years. Net income and dividend paymentsof Steam in the following periods were YearNet IncomeDividends 20X5$25,000$6,000 20X645,00016,000 20X725,00037,000Required:a.Prepare journal entries on Roller Corporation’s books relatingto its investment in Steam Company for each of the three years,assuming it accounts for the investment using the cost method. (Ifno entry is required for a transaction/event, select "No journalentry required" in the first account field.)b.Prepare journal entries on Roller Corporation’s books relatingto its investment in Steam Company for each of the three years,assuming it accounts for the investment using the equity-method.(If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field.)*Record the purchase of Steam Company stock for 20X5.*Record the dividend from Steam Company for 20X5.*Record the equity-method income for 20X5.*Record the amortization of differential value for 20X5.*Record the dividend from Steam Company for 20X6.*Record the equity-method income for 20X6.*Record the amortization of the differential value for 20X6.*Record the dividend from Steam Company for 20X7.*Record the equity-method income for 20X7.*Record the amortization of the differential value for 20X7.