On January 1, 2011, Artic Company acquires an 80% interest in Calco Company for $400,000. On the acquisition date, Calco Company has the following stockholders’ equity:Common stock ($10 par)...

On January 1, 2011, Artic Company acquires an 80% interest in Calco Company for $400,000. On the acquisition date, Calco Company has the following stockholders’ equity: Common stock ($10 par) ………$200,000 Paid-in capital in excess of par ……. 100,000 Retained earnings ………… 150,000 Total stockholders’ equity ……….$450,000 Assets and liabilities have fair values equal to book values. Goodwill totals $50,000. Calco Company has net income of $60,000 for 2011. No dividends are paid or declared during 2011. On January 1, 2012, Calco Company sells 10,000 shares of common stock at $60 per share in a public offering. Assuming the parent uses the simple equity method; prepare all parent company entries required for the issuance of the shares. Assume the following alternative situations: 1. Artic Company purchases 8,000 shares. 2. Artic Company purchases 9,000 shares. 3. Artic Company purchases 5,000 shares. View Solution:

On January 1 2011 Artic Company acquires an 80 interest