Question - On January 2, 2017, SPU Corporation acquired 30% of the outstanding voting common stock of Vasquez Company for $335,000. This investment enabled SPU to exercise significant influence over Vasquez.
The book value of the acquired shares was $315,000 (the book value of Vasquez Co was $1,050,000). The excess of cost over book value was attributed to a building that was undervalued on Vasquez's balance sheet and that had a remaining useful life of 10 years.
For the year ended December 31, 2017, Vasquez reported income of $70,000 and paid cash dividends of $15,000 on its common stock.
A) Make all journal entries necessary on SPU's books to record its investment in Vasquez Company for the first year.
B) What is the ending balance of SPU's investment in Brough at December 31, 2017?