Pancake Corporation Saw the Potential for Vertical Integration and Purchases

question 32

Essay

Pancake Corporation saw the potential for vertical integration and purchases a 15% interest in Syrup Corp.on January 1,2013,for $150,000.At that date,Syrup's stockholders' equity included $200,000 of $10 par value common stock,$300,000 of additional paid in capital,and $500,000 retained earnings.The companies began to work together and realized improved sales by both parties.On December 31,2014,Pancake paid $250,000 for an additional 20% interest in Syrup Corp.Both of Pancake's investments were made when Syrup's book values equaled their fair values.Syrup's net income and dividends for 2013 and 2014 were as follows:
Required:
1.Prepare journal entries for Pancake Corporation to account for its investment in Syrup Corporation for 2013 and 2014.
2.Calculate the balance of Pancake's investment in Syrup at December 31,2014

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Definitions:

Lewy Body

Abnormal aggregations of protein that develop inside nerve cells, contributing to Parkinson's disease and dementia.

Frontotemporal Degeneration

A group of brain disorders caused by the progressive loss of nerve cells in the frontal and/or temporal lobes, affecting behavior, language, and movement.

Protein B-amyloid

A protein involved in the formation of amyloid plaques in the brain, associated with Alzheimer's disease.

Impaired Memory

A condition characterized by the reduced ability to recall past events, learn new information, or form new memories, which can significantly impact daily functioning.