EXERCISE 43

Workpaper Eliminating Entries, Equity Method LO 5 At the beginning of 2014, Presidio Company purchased 95% of the common stock of Succo Company for $494,000. On that date, Succo Company's stockholders' equity consisted of the following: Common stock $300,000 Other contributed capital 100,000 Retained earnings 120,000 Total $520,000 During 2022, Succo Company reported net income of $40,000 and distributed dividends in the amount of $19,000. Succo Company's retained earnings balance at the end of 2021 amounted to $160,000. Presidio Company uses the equity method.

Required:

Prepare in general journal form the workpaper entries necessary in the compilation of consolidated financial statements on December 31, 2022. Explain why the partial and complete equity methods would result in the same entries in this instance.