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Equity method of accounting for Investments

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Question;Equity method of accounting for InvestmentsOn January 2, 2011, Coca-Cola Company acquired 45% of the stocks of Coca-Cola FEMSA for $30 million in cash. Coca-Cola Company accounts for its investment using the equity method. At the time of acquisition, Coca-Cola FEMSA? balance sheet was as follows (in millions):Assets:Current Assets 20Property & equipment, net 415Patents & Trademarks 150Total Assets 585Liabilities & EquityCurent Liability 42Longterm debt 518Capital Stock 12Retained Earnings 13Total Liability & Equity 585Valuation of Coca-Cola FEMSA? assets and liabilities revealed that its reported patents and trademarks (10-year life) had a fair value of $160 million and it had unrecognized brand names (15-year life) worth $9 million. Coca-Cola FEMSA?s December 31, 2014, retained earnings balance is $25 million. For 2014, it reported net income of $2.5 million and paid $650,000 in dividends.Required:1. Prepare the 2014 entries to report the above information on Coca-Cola? books? Show all your calculations.2. Calculate the Investment in Coca-Cola FEMSA balance, reported on Coca-Cola? December 31, 2014 Show all your calculations

 

Paper#40524 | Written in 18-Jul-2015

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