On January 1, 2023, Piper Company acquired an 80% interest in Sand Company for $2,276,000. At that
Question:
On January 1, 2023, Piper Company acquired an 80% interest in Sand Company for $2,276,000. At that time the capital stock and retained earnings of Sand Company were $1,800,000 and $700,000, respectively. Differences between the fair value and the book value of the identifiable assets of Sand Company were as follows:
The book values of all other assets and liabilities of Sand Company were equal to their fair values on January 1, 2023. The equipment had a remaining useful life of eight years. Inventory is accounted for on a FIFO basis. Sand Company’s reported net income and declared dividends
for 2023 through 2025 are shown here:
Required:
Prepare the eliminating/adjusting entries needed on the consolidated worksheet for the years ended 2023, 2024, and 2025. (It is not necessary to prepare the worksheet.)
1. Assume the use of the cost method.
2. Assume the use of the partial equity method.
3. Assume the use of the complete equity method.
Step by Step Answer:
Part 1 Cost Method Computation and Allocation of Difference Schedule Purchase price and implied value Less Book value of equity acquired Difference between implied and book value Inventory Equipment B...View the full answer
