On January 1, 2013, Spark Corp

question 81

Essay

On January 1, 2013, Spark Corp. acquired a 40% interest in Cranston Inc. for $250,000. On that date, Cranston's balance sheet disclosed net assets of $430,000. During 2013, Cranston reported net income of $100,000 and paid cash dividends of $30,000. Spark sold inventory costing $40,000 to Cranston during 2013 for $50,000. Cranston used all of this merchandise in its operations during 2013. Any excess cost over fair value is attributable to an unamortized trademark with a 20 year remaining life.
Required:
Prepare all of Spark's journal entries for 2013 to apply the equity method to this investment.

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Definitions:

Homeostat

A device or mechanism that regulates its internal environment to maintain a stable condition, mirroring the concept of homeostasis in biological systems.

Parasympathetic System

A division of the autonomic nervous system responsible for conserving energy and promoting restful states by slowing the heart rate, increasing intestinal and gland activity, and relaxing sphincter muscles.

Sympathetic System

Part of the autonomic nervous system that activates the body's response to stress, preparing the body for action.

Endocrine System

A collection of glands that produce hormones which regulate metabolism, growth and development, tissue function, sexual function, reproduction, sleep, and mood, among other things.