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Data for PlanetTwo Communications and its wholly - owned subsidiary, Stage 4 Networks, are given below. PlanetTwo acquired Stage 4 on January 1 , 2
Data for PlanetTwo Communications and its whollyowned subsidiary, Stage Networks, are given below. PlanetTwo acquired Stage on January PlanetTwo uses the cost method to report its investment in Stage and its accounting year ends December
in thousands
Acquisition cost $
Stage s shareholders equity, January
Stage s total reported net income,
Stage s total dividends paid,
Stage s reported net income,
Dividends declared and paid by Stage
Allocation of excess of cost over book value to identiable net assets, at acquisition date fair value book value:
Land
Buildings year life, straightline
Identiable intangibles year life
Longterm debt premium years to maturity as of January
Goodwill impairment loss,
Goodwill impairment loss,
Required
Note: Provide all answers in thousands.
a Prepare PlanetTwos journal entry or entries during to report its investment in Stage Networks, on its own books.
Note: If no entry is required, select NA no debit entry is required" and NA no credit entry is required" as your answers.
Debit Credit
Investment in Stage
Answer
Answer
To record receipt of dividends from Stage
Answer
Answer
To record PlanetTwos share of Stages net income
b Prepare the working paper eliminating entries necessary to consolidate the accounts of PlanetTwo Communications and Stage Networks at December
Debit Credit
C
Answer
Answer
To eliminate parent's dividend income balance
A
Answer
Answer
To adjust parent's accounts as if partent used equity method
E
Answer
Answer
To eliminate subsidiary's equity account balances
R
Longterm debt
Answer
Answer
Answer
Answer
Answer
To recognize fair value revaluations
O
Answer
Answer
Answer
Goodwill
Answer
To recognize revaluation writeoffs
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