Parent Company acquired 100% of Filia Inc. on January 3, 20X2 in exchange for cash. The book value of Filia's individual assets and liabilities approximated their acquisition-date fair values. On the date of acquisition, Filia reported the following:

Cash $ 155,000 Current Liabilities $ 60,000

Inventory 150,000

Plant Assets (net) 160,000 Common Stock 50,000

Property 250,000 Retained Earnings 605,000

Total Assets $ 715,000 Total Liabilities & Equity $ 715,000 During the year Filia Inc. reported $120,000 in net income and declared $10,000 in dividends. Parent Company reported $320,000 in net income and declared $25,000 in dividends. Parent accounts for their investment using the equity method. Required: a) What journal entries would be made at the consolidation date to produce consolidated financials?

b) What are the elimination entries needed for use in the consolidation worksheet on December 31, 20X2?

		a) dr Common Stock 50,000 dr Retained Earnings 605,000 cr Investment in sub 655,000 b) dr Common Stock 50,000 dr Retained Earnings 605,000 dr Investment Income 120,000 cr Investment in sub 765,000 cr dividend paid 10,000
		a) dr Investment in sub 655,000 cr Common Stock 50,000 cr Retained Earnings 605,000 b) dr Investment in sub 765,000 cr Common Stock 50,000 cr Retained Earnings 715,000
		a) dr Common Stock 50,000 dr Retained Earnings 505,000 cr Investment in sub 655,000 b) dr Common Stock 50,000 dr Retained Earnings 675,000 cr Investment in sub 725,000
		a) dr Common Stock 50,000 dr Retained Earnings 605,000 cr Investment in sub 655,000 b) dr Common Stock 50,000 dr Retained Earnings 605,000 dr Investment Income 110,000 cr Investment in sub 765,000