Farmstead Company reported the following summarized balance sheet data on December 31, 20X8: On January 1, 20X9,

Question:

Farmstead Company reported the following summarized balance sheet data on December 31, 20X8:

Account Payable Common Stock $350,000 Assets 100,000 Retained Earnings 200,000 Total $350,000 Total $350,000

On January 1, 20X9, Horrigan Corporation acquired 70 percent of Farmstead's stock for $210,000, the book value of the shares acquired. At that date the fair value of the noncontrolling interest was equal to 30 percent of the book value of Farmstead. Farmstead reported net income of $20,000 for 20X9 and paid dividends of $5,000.
Required
a. Give the equity-method journal entries recorded by Horrigan on its books during 20X9 related to its ownership of Farmstead.
b. Give the eliminating entries needed on December 31, 20X9, to prepare consolidated financial statements.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...