Nitro Corporation purchased an 80% interest in Mars Company on Janu...

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Nitro Corporation purchased an 80% interest in Mars Company on January 1, 19X5. The following determination and distribution of excess schedule was prepared on the purchase date: Price paid for investment in Mars $160,000 Less interest acquired: Common stock $ 24,000 Paid-in capital 41,600 Retained earnings 93,400 Total stockholders' equity $159,000 Interest acquired 80% 127,200 Excess of cost over book $ 32,800 Less undervaluation of long-lived assets: Equipment (80% x $20,000) 16,000 (8-year amortization, $2,000 per year) $ 16,800 Goodwill (40-year amortization, $420 per year) Income and dividends for the Mars Company during 19X5 and 19X6 were as follows: 19X5 19X6 $ 45,000 $ 52,000 Income 12,000 18,000 Dividends Instructions: (1) Complete the following entries on the books of the Mars Company under each of the methods indicated. (A) Simple Equity (B) Sophisticated (C) Cost Method Equity Method Method Event 19X5 To record investment in Mars Company Subsidiary income of $45,000 reported to parent Dividends of $12,000 paid by Mars 19X6 Subsidiary income of $52,000 reported to parent Dividends of $18,000 paid by Mars

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