RUNNING HEAD: Journal Entries 1 Week 3 – Homework ACC407 Cost Accounting II May 21, 2018 P5-39 Comprehensive Problem: Majority-Owned Subsidiary Master Corporation acquired 80 percent ownership of Stanley Wood Products Company on January 1, 20X1, for $160,000. On that date, the fair value of the noncontrolling interest was $40,000, and Stanley reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Master has used the equity method in accounting for its investment in Stanley. Trial balance data for the two companies on December 31, 20X5, are as follows: Item Cash & Receivables $ Master Corporation Debit 81,000 Inventory Land Building & Equipment 260,000 80,000 500,000 Investment in Stanley Wood Products Stock Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Income from Subsidiary 188,000 120,000 25,000 15,000 30,000 $ 1,299,000 Credit Stanley Wood Products Company Debit Credit $ 65,000 90,000 80,000 150,00 0 50,000 15,000 5,000 10,000 $ 205,000 60,000 200,000 300,000 314,000 200,.000 20,000 $ 1,299,000 $ 105,000 20,000 50,000 100.000 90,000 100,000 $ 465,00 0 $ 465,000 Additional Information 1. On the date of combination, the fair value of Stanley’s depreciable assets was $50,000 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to ...
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