Q1) Balance of Purple Company's Investment in Silver, Inc. account at December 31, 2009, was $448,000. Annual excess fair-value amortization of $12,000 results from acquisition. On May 1, 2010, Purple sold 20% interest in Silver (One-fourth of its holdings) for $130,000. In 2010, Silver had net income of $150,000 (earned evenly during the year), and on July 1, 2010, Silver declared dividends of $80,000.
a) Find out gain of loss on sale of 20% interest and make journal entry to record sale.
b) Find out balance in purple's investment in Silver account as December 31, 2010.