Question
In: Accounting
Goff Corporation acquired stock of Spiegel, Inc., on March 1, 2016, at a cost of $500,000....
Goff Corporation acquired stock of Spiegel, Inc., on March 1, 2016, at a cost of $500,000. The stock had a fair value of $550,000 at December 31, 2016, $610,000 at December 31, 2017, and $590,000 at December 31, 2018. Goff sold the stock for $640,000 on July 1, 2019. Spiegel did not pay any dividends during the time Goff held the stock.
When Goff acquired the stock, it classified the investment as available-for-sale. However, Goff transitioned to the new accounting rules for minority-passive equity investments at the beginning of 2018.
Ignore income taxes.
Assume the amount credited to OCI each year was subsequently closed to AOCI during the closing process.
Required:
Prepare the journal entry to record the acquisition of the Spiegel stock at March 1, 2016.
Prepare the journal entry to record the fair value adjustment at December 31, 2016.
Prepare the journal entry to record the fair value adjustment at December 31, 2017.
Prepare the journal entry to record the transition to the new accounting for minority-passive investments at January 1, 2018.
Prepare the journal entry to record the fair value adjustment at December 31, 2018.
Prepare the journal entry to record the sale of the investment at July 1, 2019.
(For all requirements, if no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Solutions
Expert Solution
Solution:
Gven data,
Goff Corporation acquired stock of Spiegel, Inc., on March 1, 2016, at a cost of $500,000.
The stock had a fair value of $550,000 at December 31, 2016,
$610,000 at December 31, 2017,
and $590,000 at December 31, 2018.
Goff sold the stock for $640,000 on July 1, 2019.
Spiegel did not pay any dividends during the time Goff held the stock.
When Goff acquired the stock, it classified the investment as available-for-sale. However, Goff transitioned to the new accounting rules for minority-passive equity investments at the beginning of 2018.
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JOURNAL ENTRIES for Goff Corporation
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