On October 1 2013 Kemper International acquired a 90

interest #6260
On October 1, 2013, Kemper International acquired a 90% interest in the equity of Spruco
Manufacturing when the subsidiary's equity was 8,000,000 foreign currency (FC), including
retained earnings with a balance of 3,000,000 FC. Kemper paid 8,100,000 FC, when 1 FC ¼
$1.18, for its 90% interest. The excess over book value was allocated to a patent in the amount
of 360,000 FC with the balance being traceable to goodwill. It was estimated that the patent had
a remaining useful life of 10 years and was to be amortized using the straight-line
method.Spruco's functional currency is the FC, and Kemper records its investment in the
subsidiary under the simple equity method. Since its acquisition, relevant information regarding
Spruco's net income and dividends is as follows:On December 31, 2015, when 1 FC = $1.22,
Spruco reported total assets of 13,890,000 FC and liabilities of 5,030,000 FC.RequiredPrepare
the necessary entries to eliminate Kemper's investment in Spruco account at year-end 2015
and to record the depreciation/amortization on the relevant items of cost in excess of book
value?View Solution:
On October 1 2013 Kemper International acquired a 90 interest

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