Spancrete Corporation acquires a 30% interest in the outstanding stock of Werl Corporation on January 1, 2015. At that time, the following determination and distribution of excess schedule is...

Spancrete Corporation acquires a 30% interest in the outstanding stock of Werl Corporation on January 1, 2015. At that time, the following determination and distribution of excess schedule is prepared: During 2015, Spancrete purchases $200,000 of goods from Werl. $20,000 of these purchases is in the December 31, 2015, ending inventory. During 2016, Spancrete purchases $250,000 of goods from Werl. $30,000 of these purchases is in the December 31, 2016, ending inventory. Werl’s gross profit rate is 30%. Also, Spancrete purchases a machine from Werl for $15,000 on January 1, 2016. The machine has a book value of $10,000 and a 5-year remaining life. Werl reports net income of $90,000 and pays $20,000 on dividends during 2016. Required Prepare an income distribution schedule for Werl, and record the entries to adjust the investment in Werl for 2016 using the equity method. View Solution:

Spancrete Corporation acquires a 30 interest in the outstanding stock