Answer Happy

Packard Inc. is a public company. On January 1, 2020
Packard Inc. purchased 10,000 common shares (15%) of Saturn Inc.
for $115,000 in cash. Saturn had common shares of $225,000
and retained earnings of $475,000 on this date. Packard considered
Saturn a FVTPL investment; as it did not give Packard significant
influence. On December 31, 2020 the Saturn shares were
trading at $13.00 per share.
On January 1, 2021, Packard purchased an additional 25% of
Saturn’s shares for $217,000 in cash. This second purchase
allowed Packard to exert significant influence over Saturn.
The following information was available on the date of
acquisition:
Carrying Value Fair
Value
Assets not subject to
depreciation

$205,000
$205,000
Assets subject to depreciation (10 year useful
life)
620,000
750,000
Patent (7 year useful
life)
-

35,000
Liabilities

115,000
115,000
Saturn depreciates assets using the straight-line method and has
a 35% tax rate.
During the two years, Saturn reported the following:
Net
Income
Dividends Declared
2020

$275,000
$75,000
2021

$175,000
$115,000
Additional Information
REQUIRED:
Prepare all of Packard’s journal entries for 2020 and 2021
related to Packard’s investment in Saturn.