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Question - Equity method of accounting for Investments

On January 2, 2011, Coca-Cola Company acquired 45% of the stocks of Coca-Cola FEMSA for $30 million in cash. Coca-Cola Company accounts for its investment using the equity method. At the time of acquisition, Coca-Cola FEMSA' balance sheet was as follows (in millions):

Assets:

Current Assets 20

Property & equipment, net 415

Patents & Trademarks 150

Total Assets 585

Liabilities & Equity:

Current Liability 42

Long-term debt 518

Capital Stock 12

Retained Earnings 13

Total Liability & Equity 585

Valuation of Coca-Cola FEMSA' assets and liabilities revealed that its reported patents and trademarks (10-year life) had a fair value of $160 million and it had unrecognized brand names (15-year life) worth $9 million. Coca-Cola FEMSA's December 31, 2014, retained earnings balance is $25 million. For 2014, it reported net income of $2.5 million and paid $650,000 in dividends.

Required:

1. Prepare the 2014 entries to report the above information on Coca-Cola' books? Show all your calculations.

2. Calculate the Investment in Coca-Cola FEMSA balance, reported on Coca-Cola' December 31, 2014 Show all your calculations.

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