On January 1, 2014, Bretz, Inc., acquired 60 percent of the outstanding shares of Keane Company for $573,000 in cash. The price paid was proportionate to Keane’s total fair value although at the date of acquisition, Keane had a total book value of $810,000. All assets acquired and liabilities assumed had fair values equal to book values except for a copyright (6-year remaining life) that was undervalued in Keane’s accounting records by $120,000. During 2014, Keane reported net income of $150,000 and declared cash dividends of $80,000. On January 1, 2015, Bretz bought an additional 30 percent interest in Keane for $300,000. The following financial information is for these two companies for 2015. Keane issued no additional capital stock during either 2014 or 2015. Also, at year-end, there were no intraentity receivables or payables.
a. Show the journal entry Bretz made to record its January 1, 2015, acquisition of an additional 30 percent of Keane Company shares.
b. Prepare a schedule showing how Bretz determined the Investment in Keane Company balance as of December 31, 2015.
c. Prepare a consolidated worksheet for Bretz, Inc., and Keane Company for December 31, 2015.
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