Finding gain of loss on sale and balance in investment


Q1) Balance of Purple Company's Investment in Silver, Inc. account at December 31, 2009, was $448,000.  Annual excess fair-value amortization of $12,000 results from acquisition.  On May 1, 2010, Purple sold 20% interest in Silver (One-fourth of its holdings) for $130,000.  In 2010, Silver had net income of $150,000 (earned evenly during the year), and on July 1, 2010, Silver declared dividends of $80,000.

 

a) Find out gain of loss on sale of 20% interest and make journal entry to record sale.

 

b) Find out balance in purple's investment in Silver account as December 31, 2010.

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Finding gain of loss on sale and balance in investment
Reference No:- TGS017939

Expected delivery within 24 Hours