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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.

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