Question & Answer: On January 1, 2014, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Comp…..

On January 1, 2014, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,290,800 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,570,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $264,000. On January 1, 2015, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $475,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger During the two years following the acquisition, Sellinger reported the following net income and dividends: 2014 201 Net income Dividends 480,000 593,000 200,000 240,000 a. Prepare Palka’s journal entry to record its January 1, 2015, acquisition of an additional 25 percent ownership of Selinger Company shares. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.) View transaction list Journal entry worksheet Record the acquisition of an additional 25 percent ownership of Sellinger Company shares. Note: Enter debits before credits. General Journal January 01, 2015 Debit Credit