Cinema Company acquired 70 percent of Movie Corporation's shares on December 31, 2005, at underlying book value of $98,000. At that date, the fair value of the noncontrolling interest was equal to 30 percent of the book value of Movie Corporation. Movie's balance sheet on January 1, 2008, contained the following balances

Cash $50,000 Accounts Payable $40,000

Accounts Receivable 35,000 Bonds Payable 100,000

Inventory 40,000 Common Stock 50,000

Buildings & Equipment 300,000 Additional Paid-In Capital 75,000

Less: Acc Depreciation (100,000) Retained Earnings 60,000

Total Assets $325,000 Total Libilities & Equities $325,000

On January 1, 2008, Movie acquired 5,000 of its own $2 par value common share from Nonaffiliated Coporation for $6 per share.

1. Prepare and analysis of the ownership position.

2. Based on preceding information, what will be the journal entry to be recorded on cinema company's books to recognize the change in the book value of the shares it holds?

3. Based on the preceding information prepare the eliminating entry needed in preparing a consolidated balance sheet immediately following the acquisition of shares.