Seven years ago, on December 31, 2006, Adams Corporation acquired all of the stock of Baker Company.

Question:

Seven years ago, on December 31, 2006, Adams acquired all of the stock of Baker Company. The fair value of Adams' shares used in the exchange was $7,500,000. At the time of acquisition, the book value of Baker's stockholders' equity was $5,000,000, and the fair value of Baker's building (25-year life) exceeded its book value by $l ,000,000. From the date of acquisition to December 31,2012, Baker had cumulative net income of $1,300,000 and paid total dividends of $400,000. For 2013, Baker reported net income of $300,000 and paid cash dividends of $ 100,000. Adams uses the complete equity method to account for its investment in Baker. There is no impairment loss for the period 2007 through 2012, but there is impairment loss of $100,000 in 2013.

Required
Prepare the working paper eliminating entries necessary to consolidate the of Adams and Baker at December 31,2013. Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s 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...