On January 1, 2018, Spark Corp

question 35

Essay

On January 1, 2018, 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 2018, Cranston reported net income of $100,000 and paid cash dividends of $30,000.Spark sold inventory costing $40,000 to Cranston during 2018 for $50,000.Cranston used all of this merchandise in its operations during 2018.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 2018 to apply the equity method to this investment.

Comprehend the processes and legal requirements for forming and operating specific business entities within the United States.

Understand the role and responsibilities of franchises and franchisees under the franchise model.

Identify legal documents required for forming specific business organizations and their legal implications.

Understand and apply the concept of proportions to solve for unknown quantities.

---

Definitions:

American Option

Call or put option that can be exercised on or before the expiration date.

European Option

A type of options contract that allows the holder to exercise the option only on its expiration date.

Underlying Asset

An asset on which a derivative instrument, such as an option or futures contract, is based, determining its value and performance.

April Option

A financial derivative contract that gives the holder the right, but not the obligation, to buy or sell an asset at a set price on or before a specific date in April.