On January 1, 20X8, Gregory Corporation acquired 90 percent of Nova Company's voting stock for $126,000. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Nova at that date. Gregory uses the equity method in accounting for its ownership of Nova. During 20X8, Nova earned net income of $25,000 and declared dividends of $10,000. On December 31, 20X8, the trial balances of the two companies are as follows: Complete the Book Value Calculation table below and provide all eliminating/consolidation entries (Basic & Optional) required as of December 31, 20X8, to prepare consolidated financial statements.

Gregory Corp		Nova Company
	Dr	Cr	Dr	Cr
Current Assets	200000		120000
Depreciable Assets	300000		225000
Investment in Nova	139500
Depreciation Expense	30000		25000
Other Expenses	100000		60000
Dividends Declared	30000		10000
Accumulated Depreciation		120000		75000
Current Liabilities		62000		25000
Long-Term Debt		75000		90000
Common Stock		100000		75000
Retained Earnings		120000		65000
Sales		300000		110000
Income from Subsidiary		22500
Totals	799500	799500	440000	440000

A. Prepare the Journal entry (entries) for Gregory to record net income and dividends earned by Nova during the first year:

Complete the Book Value Calculation table below and provide all eliminating/consolidation entries (Basic & Optional) required to prepare consolidated financial statements.

		Investment in						Income From
		Nova						Nova