(CPA Adapted) On January 1, Year 1. Parent Company acquires a 80% interest in Subsidiary Company by issuing 100,000 shares of $10 par common stock. The market value of the stock at the date of issuance was $17.40 per share. The investment was accounted for internally using the cost method. During Year 1, Subsidiary Company reported net income of $400,000 and declared and paid $12,000 of dividends. Parent uses straight-line depreciation and estimates the remaining life of plant and equipment to be five years. Any excess over fair value is goodwill. Assume goodwill is determined to be impaired by $25,000 for the year. An intercompany receivable and payable of $20,000 was included on the respective financial statements of each company. The purchase is properly accounted for as an acquisition. The below information relates to the subsidiary as of the date of acquisition: Book Value Fair Value Assets 130.000 130,000 Accounts receivable 1,000,000 1.000.000 Inventory 2,000,000 2.000.000 Plant and equipment 1.000.000 1.850,000 Total assets 4.130.000 Cash Liabilities and Equity Accounts payable 1,000,000 1.000.000 Interest payable 380,000 380.000 Mortgage payable 2.000.000 2,000,000 Common stock 600,000 Other comprehensive income 100.000 Retained earnings 50.000 Total liabilities and equity 4,130,000 Prepare the eliminating entries necessary to prepare the December 31. Year 1 consolidated financial statements and answer the following questions by selecting the best response from the dropdown menu Total liabilities and equity 4,130,000 Prepare the eliminating entries necessary to prepare the December 31, Year 1 consolidated financial statements and answer the following questions by selecting the best response from the dropdown menu. The entry to eliminate the intercompany payable/receivable would include which of the following? [Select] [ Select ] Debit to accounts receivable for $20.000 in the entry to establish Debit to accounts payable for $16,000 Debit to accounts receivable for $16,000 Debit to accounts payable for $20,000 The entry to emate mercompariy dividends should include which of the following? [Select] The amount of goodwill after impairment is: [ Select . The entry to record the incremental increase in depreciation associated with asset revaluation would include: [Select] Note for those interested: The CPA version of this question credited accumulated depreciation rather than Plant and Equipment, which is a departure from your textbook 10,000 Retained earnings Total liabilities and equity 50,000 4,130,000 Prepare the eliminating entries necessary to prepare the December 31, Year 1 consolidated financial statements and answer the following questions by selecting the best response from the dropdown menu. . The entry to eliminate the intercompany payable/receivable would include which of the following? [ Select What is the amount that would appear in the entry to establish reciprocity? (Select] [ Select ] The entry to $50,000 nds should include SO which of the $310.400 $388,000 The amount'urgUUUWII aner impairment ts: Select ] . The entry to record the incremental increase in depreciation associated with asset revaluation would include: Select 1 Note for those interested: The CPA version of this question credited accumulated depreciation rather than Plant and Equipment, which is a departure from your textbook. Total liabilities and equity 4,130,000 Prepare the eliminating entries necessary to prepare the December 31, Year 1 consolidated financial statements and answer the following questions by selecting the best response from the dropdown menu. The entry to eliminate the intercompany payable/receivable would include which of the following? [Select ] What is the amount that would appear in the entry to establish reciprocity? [Select] > The entry to eliminate intercompany dividends should include which of the following? [Select] m Select] The amount of goodwill Debit to dividend income for $9.600 Debit to investment in S for $12.000 [Select] Debit to dividend income for $12.000 Debit to investment in S for $9.600 . The entry to record the incrementar micrease repreciation associated with asset revaluation would include: [Select Note for those interested: The CPA version of this question credited accumulated depreciation rather than Plant and Equipment, which is a departure from your textbook. 1, Year 1 consolidated financial statements and answer the Sllowing questions by selecting the best response from the ropdown menu. . The entry to eliminate the intercompany payable/receivable would include which of the following? [ Select ] 1. What is the amount that would appear in the entry to establish reciprocity? (Select ] The entry to eliminate intercompany dividends should include which of the following? [ Select] 23 The amount of goodwill after impairment is: Select ] [ Select ] $1.400,000 Antal increase in depreciation $435.000 n would include: $550,000 $1,115,000 Note for those interested: The CPA version of this question credited accumulated depreciation rather than Plant and Equipment, which is a departure from your textbook. and equity 4,130,000 Prepare the eliminating entries necessary to prepare the Decem 31, Year 1 consolidated financial statements and answer the following questions by selecting the best response from the dropdown menu. The entry to eliminate the intercompany payable/receivable would include which of the following? [Select] . What is the amount that would appear in the entry to establish reciprocity? (Select] The entry to eliminate intercompany dividends should include which of the following? [Select ] The amount of goodwill after impairment is: [Select The entry to record the incremental increase in depreciation associated with asset revaluation would include: [ Select] [ Select ] Noti Debit to investment in S for $136.000 ion credited Debit to depreciation expense for $170,000 acci Debit to depreciation expense for $136,000 hent, which is a dep Debit to 1/1 retained earnings - parent for $136,000