On July 1, 2007, Grape Crushers Company purchased for cash 40% of the outstanding capital stock of Fuzzy Flask Corporation. Both Grape Crushers and Fuzzy Flask have a December 31 year-end. Fuzzy Flask Corporation, whose common stock is actively traded on the American Stock Exchange, paid a cash dividend on November 15, 2007, to Grape Crushers Company and its other stockholders. It also reported its total net income for the year of $920,000 to Grape Crushers Company.
Prepare a one-page email of instructions on how Grape Crushers Company should report the above facts in its December 31, 2007, balance sheet and its 2003 income statement. In your e-mail, identify and describe the method of valuation you recommend. Provide rationale where you can. Address your e-mail to the chief accountant at Grape Crushers Company.
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Below are my answers.
Anna Liza Gaspar
Date : May 26, 2009
To : Name
Grape Crushers Company
From : Name
First, allow me to congratulate you on your company's successful purchase of 40 per cent of the ...
This solution provides an solution for reporting balance sheets and income statements.