Refer to the balance sheets of Plate and Salad in the previous problem. Assume that Plate buys

Question:

Refer to the balance sheets of Plate and Salad in the previous problem. Assume that Plate buys 80% of Salad’s for $180,000 cash. The fair value of Salad’s land is $20,000, the fair value of Salad’s buildings and equipment is $110,000, and all other fair values equal book values.

Required:
Provide answers to the following under (a) the acquisition method and (b) the purchase method.
1. Prepare the journal entry on Plate’s books to record the acquisition of Salad.
2. Prepare the elimination entries needed to prepare a consolidated immediately after the acquisition.
3. Prepare the consolidated immediately after the acquisition.

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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...