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On January 2, 2018, Company P acquired all of the outstanding voting stock of Company S in exchange for $6,000 in stock. Company P elected

image text in transcribed On January 2, 2018, Company P acquired all of the outstanding voting stock of Company S in exchange for $6,000 in stock. Company P elected to exercise control over Company S as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 year ends. At the acquisition date, Company S has a stockholder's equity of $2,500, which includes Retained Earnings of $1,700. Company P pursued the acquisition, in part, to utilize Company S technology and computer software. These items had fair values that differed from their values on Company S books as follows as of the acquisition date: Asset Book Value Fair Value Remaining Life Patented technology $ 140 $ 2,240 7 years Computer software $ 60 $ 1,260 12 years At December 31 2020, Company S owes Company P $20. Company S remaining identifiable assets and liabilities had acquisiiton-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Company S reported the following income and dividends: Net income Dividends 2018 $ 900 $ 150 2019 $ 940 $ 150 2020 $ 975 $ 150 REQUIRED: LABEL EACH STEP 1. 2. 3. 4. Prepare the analysis as of acquisition date including unamortized differential at 1/1/18 and through 2020. Calculate the balance in the account Investment in Sub as of 12/31/20. Show all computations. Prepare the journal entries Company P recorded with respect to its investment in Company S for the year ende Separately calculate consolidated net income for 2020 5. Prepare all necessary elimination entries for the year ended 2020. 6. Complete the consolidated workpapers for the year ended 12/31/20. Use appropriate formulas throughout your work. Points 15 10 15 20 20 20 100

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