On January 1, 2016, Poplar Company Acquired 80% of the Common

question 34

Essay

On January 1, 2016, Poplar Company acquired 80% of the common stock of Sequoia Company for $400,000.On this date, Sequoia had total owners' equity of $400,000.The excess of cost over book value was due to a patent with remaining life of 10 years.Poplar adopted the simple equity method to account for its investment in Sequoia.
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Sequoia's income for the three years 2016 through 2019 is $80,000, $60,000, and $100,000 respectively.All income is earned evenly throughout the year; Sub has paid no dividends.
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On July 1, 2019, Poplar Company sold 10% of the total stock of Sequoia for $70,000, reducing its investment percentage to 70%.Prepare Poplar's general journal entries for 2019.

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Definitions:

Withholding Table

A chart that helps employers determine the amount of taxes to withhold from employees' paychecks based on their earnings and tax status.

FICA Tax Rate

The combined percentages for Social Security and Medicare taxes that employers and employees must pay based on wages or salaries.

Federal Income Taxes

Levies placed on the yearly income of persons, companies, trusts, and various legal bodies by the federal government.

Federal Unemployment Compensation Tax

A federal tax imposed on employers to fund state workforce agencies and unemployment insurance.