B Deferred Tax Effects, Acquisition Entry and Eliminating Entries Patel Company paid $570,000 for 95% of the common stock of Seely Company on January 1, 2004. Seely Company had the following assets, liabilities, and owners’ equity at that time: LO7 Cash Accounts Receivable Inventory (LIFO)
Land Plant Assets (net)
Total Assets Allowance for Uncollectible Accounts Accounts Payable Bonds Payable Common Stock, $1 par value Other Contributed Capital Retained Earnings Total Equities Required:
Book Value Tax Basis Fair Value Excess $ 20,000 $ 20,000 $—O—
112,000 112,000 —J)—
82,000 134,000 52,000 30,000 55,000 25,000 392,000 463,000 71,000 $636,000 $784,000 $ 10,000 $ 10,000 $—Oo—
54,000 54,000 —0—
200,000 180,000 20,000 80,000 132,000 160,000 $636,000 109 A. Prepare the stock acquisition entry on the books of Patel Company, taking into account tax effects. Assume an income tax rate of 40%.
B. Prepare eliminating entries for the preparation of a consolidated balance sheet workpaper on January 1, 2004.