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:

Deuterostomes

A major group of animals defined by their embryonic development, in which the first opening (the blastopore) becomes the anus.

Photoreceptors

Cells or organs in organisms that respond to light, allowing for the perception of visual images or light-dependent physiological responses.

Crotamine

A toxic peptide found in the venom of certain South American rattlesnakes, known for its antimicrobial and pain-inducing properties.

Defensin Genes

Genes that encode for defensins, which are small cysteine-rich cationic proteins involved in the innate immune system by providing a first line of defense against pathogens.