On January 1, 2011, Spark Corp

question 57

Essay

On January 1, 2011, 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 2011, Cranston reported net income of $100,000 and paid cash dividends of $30,000. Spark sold inventory costing $40,000 to Cranston during 2011 for $50,000. Cranston used all of this merchandise in its operations during 2011. 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 2011 to apply the equity method to this investment.

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Definitions:

Long-Range Strategic Plans

Strategic plans that outline an organization's goals, strategies, and actions over an extended period, usually three to five years or longer, to achieve long-term objectives.

Voluntary Family Activities

Activities organized and participated in by employees and their families outside of work, often sponsored or supported by the employer to promote work-life balance.

Duty to Accommodate

The legal and ethical obligation of employers to adjust working conditions or procedures to address the needs of employees with disabilities.

Canadian Human Rights Act

Legislation in Canada that prohibits discrimination on various grounds such as race, gender, and disability.