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Parent purchased Subsidiary on January 1, 2016. The excess of investment cost over book value of exist180,000 was allocated entirely to a 10-year royalty agreement.
Parent purchased Subsidiary on January 1, 2016. The excess of investment cost over book value of exist180,000 was allocated entirely to a 10-year royalty agreement. The Subsidiary's retained earnings balance on the date of acquisition was exist1, 508, 900. The Parent uses the cost method to account for its pre-consolidation investment in the Subsidiary. Subsidiary regularly sells merchandise to Parent. In 2017, inter-company sales amounted to exist96, 230, with exist22, 450 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to exist30, 400. In 2018, inter-company sales amounted to exist99.450 with exist29, 330 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to exist42, 800. Financial statements of Parent and Subsidiary for the year ended December 31, 2018 are presented below. Prepare a schedule showing the computation of the [ADJ] consolidating entry necessary for 2018. Prepare a consolidation worksheet for 2018
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