Data for Paris Corporation and its wholly-owned subsidiary, Oslo Corporation, are given below. Paris acquired Oslo on January l, 2006. Paris uses the complete equity method to report its investment in Oslo, and its accounting year ends December 31.
Acquisition cost$6,000,000
Oslo's stockholders' equity, January 1, 2006 2,500,000
Oslo's total reported income, 2006-2013 4,000,000
Oslo's total dividends paid, 2006-20131,200,000
Oslo's reported income, 2014 450,000
Dividends paid by Oslo, 2014 100,000
Allocation of excess of cost over book value to identifiable net assets, at acquisition date:
Land450,000
Buildings (20 year life, straight-line)(400,000)
Identifiable intangibles (5 year life)1,000,000
Long-term debt discount (10 years to maturity as of January 1, 2006)250,000
Goodwill impairment loss, 2006-2013300,000
Goodwill impairment loss, 201460,000
Required
a. Calculate the goodwill purchased in this acquisition.
b. Calculate the Equity in net income for 2014, reported on Paris's books, using the complete equity method.
c. Calculate the balance in the Investment in Oslo at December 31,2014, reported on Paris's books.
d. Prepare the eliminating entries necessary to consolidate the financial statements of Paris and Oslo for 2014.