P Company acquired 27,000 shares of the common stock of S Company on 1/1/15, for $710,000 cash. The stockholders equity section of S Companys balance sheet on that date was as follows:

Common Stock ($15 par) $450,000

APIC $60,000

RE $240,000

Total SE $750,000

On the date of acquisition, S Company owed P Company $10,000 on open account.

Present, in general journal form, the elimination (workpaper) entries for the preparation of a consolidated balance sheetworkpaper on 1/1/15.

Complete the above by completing the following steps.

REQUIRED STEPS:

What is the REAL journal entry to record the stock acquisition?

Prepare the CAD

Prepare the Elimination/Workpaper Entry

Prepare the Intercompany Elimination/Workpaper Entry

Note: When a detailed review (valuation) of the existing assets and liabilities of S Company was performed there was two accounts that had differences between book value and fair value (see below).

Book Value Fair Value

Inventory $125,000 $100,000

Land $950,000 $990,000