Power Corporation purchased 100 percent of the common stock of Snow Corporation on January 1,…

Power Corporation purchased 100 percent of the common stock of Snow Corporation on January 1, 20X2, by issuing 45,000 shares of its $6 par value common stock. The market price of Power’s shares at the date of issue was $24. Snow reported net assets with a book value of $980,000 on that date. The amount paid in excess of the book value of Snow’s net assets was attributed to the increased value of patents held by Snow with a remaining useful life of eight years. Snow reported net income of $56,000 and paid dividends of $20,000 in 20X2 and reported a net loss of $44,000 and paid dividends of $10,000 in 20X3.

Assuming that Power Corporation uses the equity method in accounting for its investment in Snow Corporation, prepare all journal entries for Power for 20X2 and 20X3.

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