On December 31, 20X6. Greenly Corporation and Lindy Company entered into a business combination in which Greenly

Question:

On December 31, 20X6. Greenly Corporation and Lindy Company entered into a business combination in which Greenly acquired all the common stock of Lindy for $\$ 935.000$. At the date of combination, Lindy had common stock outstanding with a par value of $\$ 100.000$, additional paid-in capital of $\$ 400,000$, and retained earnings of $\$ 175,000$. The fair values and book values of all Lindy's assets and liabilities were equal at the date of combination, except for the following:

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The buildings had a remaining life of 20 years, while the equipment was expected to last another 10 years. In accounting for the business combination, Greenly decided to use push-down accounting on the books of Lindy Company.
During 20X7, Lindy earned net income of $\$ 88,000$ and paid a dividend of $\$ 50,000$. All of the inventory on hand at the end of 20X6 was sold during 20X7. During 20X8, Lindy earned net income of $\$ 90,000$ and paid a dividend of $\$ 50,000$.
\section*{Required}

a. Record the purchase of Lindy Company's stock on the books of Greenly on December 31, 20X6.

b. Record any entries that would be made on December 31, 20X6, on the books of Lindy Company related to the business combination if push-down accounting is employed.

c. Present all eliminating entries that would appear in the workpaper to prepare a consolidated balance sheet immediately after the combination.

d. Present all entries that would be recorded by Greenly during $20 \times 7$ related to its investment in Lindy if Greenly uses the equity method of accounting for its investment.

e. Present all eliminating entries that would appear in the workpaper to prepare a full set of consolidated financial statements for the year $20 \times 7$.

f. Present all eliminating entries that would appear in the workpaper to prepare a full set of consolidated financial statements for the year $20 \mathrm{X} 8$.

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