On January 1, 2017, Pruit Company purchased 85% of the outstanding common stock of Salty Company for $525,000. On that date, Salty Companys stockholders equity consisted of common stock, $150,000; other contributed capital, $60,000; and retained earnings, $210,000.
Pruit Company paid more than the book value of net assets acquired because the recorded cost of Salty Companys land was significantly less than its fair value.
During 2017 Salty Company earned $222,000 and declared and paid a $75,000 dividend. Pruit Company used the partial equity method to record its investment in Salty Company.
Required:
Prepare the investment related entries on Pruit Companys books for 2017.
Prepare the workpaper eliminating entries for a workpaper on December 31, 2017.