I need help in verifying my CAD schedule and I need help with creating the eliminating entries, I am unsure if the sale of inventory should be ignored since the consolidated financials would be at the acquisition date.

Thank you!

A Stevens Company Date of Acquisition - January 1, 2014 On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000 cash. An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition: Additional Information Date of Acquisition Stevens Company's equipment had an original life of 15 years and a remaining useful life of 10 years. All the inventory was sold in 2014. Difference Stevens Company Balance Sheet As of January 1, 2014 Book Value Cash 130,726 5 Accounts receivable 200,000 5 Inventories 160,000 - Equipment, net 200,000 Land 190,000 Other 54,830 Total assets 935,556 Fair Value 130,726 200,000 210,000 260,000 290,000 54,830 1,145,556 50,000 60,000 100,000 210,000 40,000 205,556 e Note payable = Bonds payable Common stock Retained earnings 5 Total liabilities and equity 40,000 205,556 500,000 190,000 935,556 C D F G H I J . B Palmer Company Date of Acquisition - January 1, 2014 (before acquisition of Stevens was made) Additional Information - Date of Acquisition Note the following transaction of interest between Palmer and Stevens: a) Stevens Company's notes payable included $40,000 due to Palmer Company. Cash Accounts receivable Note receivable Inventory - Equipment, net Land Total Book Value 1,179,300 222,600 40,000 130,400 200,000 160,000 1,932,300 - Accounts payable Common stock - Other contributed capital - Retained earnings Total 270,500 400,000 1,000,000 261,800 1,932,300 B Computation and Allocation of Differences Schedule Parent 90% Noncontrolling 10% 111,111 Total Value 100% 1,111,111 1,000,000 450,000 50,000 19,000 171,000 500,000 190,000 690,000 621,000 379,000 69,000 42,111 421,111 4 Ownership % 5 Purchase price and implied value 6 Less: Book value of subsidiary equity Common Stock 8 Retained Earnings Total book value 10 Diff btwn implied and book 11 Allocations to adjust to fair value: 12 Inventory 13 Equipment 14 Land 15 Excess (deficit) implied over fair value 16 Goodwill 17 Balance (50,000) (45,000) (54,000) (90,000) 190,000 (190,000) (5,000) (6,000) (10,000) 21,111 (21,111) 0 (60,000) (100,000) 211,111 (211,111) 0 2 G H 1 Eliminating Entries - Date of Acquisition 3 Entry Entry # Date Account Name Debit Credit + 0 0 Consolidation Worksheet PARENT COMPANY AND SUBSIDIARY Consolidated Balance Sheet Workpaper January 1, 2014 Eliminations Subsidiary Company Noncontrolling Interest Consolidated Balance Company Dr. Cr. Cash Accounts Receivable Note Receivable Inventory = Investment in Subsidiary Company - Difference btwn implied and book - Equipment, net 5 Land - Other Goodwill Total Assets Accounts Payable Notes Payable Bonds Payable - Common Stock: - Parent Company Subsidiary Company Other Contributed Capital: Parent Company Subsidiary Company Retained Earnings: Parent Company - Subsidiary Company Noncontrolling Interest Total Liabilities and Equity A 1 Trial Balance 2 As of December 31, 2014 3 Cost Method 6 Cost of sales 7 Depreciation expense 8 Other expenses 9 Dividends declared 10 Cash 11 Accounts receivable 12 Inventories 13 Investment in Stevens 74 Equipment, net 15 Land 76 Total debits Palmer Co. 425,000 30,000 135,000 145,000 212,000 220,900 99,400 1,000,000 210,000 360,000 2,837,300 Stevens Co 220,000 20,000 30,000 40,000 157,500 271,000 89,500 200,000 290,000 1,318,000 420,000 208,000 78 Sales 19 Dividend income 20 Accounts payable 21 Bonds payable 22 Common stock 23 Retained earnings 24 Total credits 805,000 36,000 334,500 400,000 1,000,000 261,800 2,837,300 500,000 190,000 1,318,000 Note: Income statement accounts have not yet been closed 26 out to retained earnings. A Stevens Company Date of Acquisition - January 1, 2014 On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000 cash. An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition: Additional Information Date of Acquisition Stevens Company's equipment had an original life of 15 years and a remaining useful life of 10 years. All the inventory was sold in 2014. Difference Stevens Company Balance Sheet As of January 1, 2014 Book Value Cash 130,726 5 Accounts receivable 200,000 5 Inventories 160,000 - Equipment, net 200,000 Land 190,000 Other 54,830 Total assets 935,556 Fair Value 130,726 200,000 210,000 260,000 290,000 54,830 1,145,556 50,000 60,000 100,000 210,000 40,000 205,556 e Note payable = Bonds payable Common stock Retained earnings 5 Total liabilities and equity 40,000 205,556 500,000 190,000 935,556 C D F G H I J . B Palmer Company Date of Acquisition - January 1, 2014 (before acquisition of Stevens was made) Additional Information - Date of Acquisition Note the following transaction of interest between Palmer and Stevens: a) Stevens Company's notes payable included $40,000 due to Palmer Company. Cash Accounts receivable Note receivable Inventory - Equipment, net Land Total Book Value 1,179,300 222,600 40,000 130,400 200,000 160,000 1,932,300 - Accounts payable Common stock - Other contributed capital - Retained earnings Total 270,500 400,000 1,000,000 261,800 1,932,300 B Computation and Allocation of Differences Schedule Parent 90% Noncontrolling 10% 111,111 Total Value 100% 1,111,111 1,000,000 450,000 50,000 19,000 171,000 500,000 190,000 690,000 621,000 379,000 69,000 42,111 421,111 4 Ownership % 5 Purchase price and implied value 6 Less: Book value of subsidiary equity Common Stock 8 Retained Earnings Total book value 10 Diff btwn implied and book 11 Allocations to adjust to fair value: 12 Inventory 13 Equipment 14 Land 15 Excess (deficit) implied over fair value 16 Goodwill 17 Balance (50,000) (45,000) (54,000) (90,000) 190,000 (190,000) (5,000) (6,000) (10,000) 21,111 (21,111) 0 (60,000) (100,000) 211,111 (211,111) 0 2 G H 1 Eliminating Entries - Date of Acquisition 3 Entry Entry # Date Account Name Debit Credit + 0 0 Consolidation Worksheet PARENT COMPANY AND SUBSIDIARY Consolidated Balance Sheet Workpaper January 1, 2014 Eliminations Subsidiary Company Noncontrolling Interest Consolidated Balance Company Dr. Cr. Cash Accounts Receivable Note Receivable Inventory = Investment in Subsidiary Company - Difference btwn implied and book - Equipment, net 5 Land - Other Goodwill Total Assets Accounts Payable Notes Payable Bonds Payable - Common Stock: - Parent Company Subsidiary Company Other Contributed Capital: Parent Company Subsidiary Company Retained Earnings: Parent Company - Subsidiary Company Noncontrolling Interest Total Liabilities and Equity A 1 Trial Balance 2 As of December 31, 2014 3 Cost Method 6 Cost of sales 7 Depreciation expense 8 Other expenses 9 Dividends declared 10 Cash 11 Accounts receivable 12 Inventories 13 Investment in Stevens 74 Equipment, net 15 Land 76 Total debits Palmer Co. 425,000 30,000 135,000 145,000 212,000 220,900 99,400 1,000,000 210,000 360,000 2,837,300 Stevens Co 220,000 20,000 30,000 40,000 157,500 271,000 89,500 200,000 290,000 1,318,000 420,000 208,000 78 Sales 19 Dividend income 20 Accounts payable 21 Bonds payable 22 Common stock 23 Retained earnings 24 Total credits 805,000 36,000 334,500 400,000 1,000,000 261,800 2,837,300 500,000 190,000 1,318,000 Note: Income statement accounts have not yet been closed 26 out to retained earnings