Truck Company owns a 90 interest in Trailer Company on

#6245
Truck Company owns a 90% interest in Trailer Company on January 1, 2015, when Trail has
the following stockholders' equity:Common stock ($10 par). . . . . . . . . . . . . . . . . . . .
$100,000Paid-in capital in excess of par . . . . . . . . . . . . . . . . 250,000Retained earnings . . . . . .
. . . . . . . . . . . . . . . . . . . . 200,000Total stockholders' equity . . . . . . . . . . . . . . . . . . .
$550,000The investment is purchased for book value, $495,000.On July 1, 2015, Trail sells
2,000 additional shares to non-controlling shareholders in a private offering for $75 per share.
Trailer's net income for 2015 is $70,000, and the income is earned evenly during the year.Truck
uses the simple equity method to record the investment in Trailer. Summary entries are made
each December 31 to record the year's activity.Prepare Truck's equity adjustments for 2015 that
result from the above activities of Trailer Company during 2011. Assume Truck has $500,000 of
paid-in capital in excess of par.View Solution:
Truck Company owns a 90 interest in Trailer Company on

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