Please assist with the following! Thanks!
Requirements:
1.) The differential table as of the date of acquisition and complete the amortization expense columns for 2001-2008.
2.) The differential balance as of 1/1/2008.
3.) All applicable equity method entries for the year ended, December 31, 2008.
4.) The elimination entries as of December 31, 2008.
Parent Corporation holds 75% of the common stock of Subsidiary Distributors, Inc., purchased on December 31, 2001, for $2,400,000. At the date of acquisition, Subsidiary reported common stock with a par value of $1,000,000, additional paid-in-capital of $1,300,000, and retained earnings of $650,000. The fair value of the non-controlling interest at acquisition was $775,000. The differential at acquisition was attributable to the following items: Differential Inventory (all sold in 2002) 38,000 Land 62,000 Good will 60,000 Total 160,000 Throughout 20X8, Parent sold merchandise to Subsidiary, Subsidiary sold 60% of the inventory by December 31, 20X8. Cost of Inventory to Parent $ 475,000 Sale Price of Inventory to Subsidary $ 620,000 On January 1, 2008, Parent's inventory contained inventory purchased from Subsidiary, which had produced the inventory. By December 31, 2008. Parent had sold all inventory that had been on hand January 1, 2008. Cost of Inventory to Subsidary $ 420,000 Sale Price of Inventory to Parent $ 490,000 During 2002, Parent sold a plot of land that it had purchased several years before to Subsidiary; Subsidiary continues to hold the land. Cost of Land to Parent $ 445,000 Sale Price of Land to Subsidary 345,000 On January 1, 2008, Parent purchased equipment from Subsidiary. Subsidiary had purchased that equipment on December 31, 2002. The equipment is expected to have a total 15-year life and no salvage value. Both entities use the straight-line method of depreciation and amortization. Cost of Equipment to Subsidary $ 400,000 Sale Price of Equipment to Parent $ 475,000 On January 1, 2006, Parent sold par value, 10 percent, five-year bonds at 115 directly to Subsidiary. The bonds pay interest annually on December 31. Both entities amortize bond premiums and discounts on a straight-line basis. Par Value of Bonds $ 380,000 Subsidiary issued par value 10-year bonds with a coupon rate of 10 percent on January 1, 2005. On December 31, 2007, Parent purchased par value of Subsidiary's bonds. Interest payments are made on July 1 and January 1. Both entities amortize bond premiums and discounts on a straight-line basis. Par Value of Bonds $ 400,000 Bond Issue Price $ 395,000 Percentage of Bonds Outstand Purchased 40% Purchase Price of Bond Investment $ 182,000 As of December 31, 2008, Subsidiary had declared but not yet paid its fourth-quarter dividend of $7,000. On December 31, 2008, applicable information from the pre-closing trial balances of Parent and Subsidiary appeared in T-Accounts as follows: SUBSIDIARY Common Stock R/E $ 1,000,000 $ 1,400,000 Beg. Balance Declared Dividends $ 20,000 $ 110,000 Net Income $ 1,000,000 $ 1,490,000 APIC $ 1,350,000 $ 1,350,000Requirement 1: Prepare the differential table as of the date of acquisition and omplete the amortization expense columns for 2001-2008. Instructions: the differential table as of the date of acquisition an se columns for 2001-2008. Be sure to prepare a complete table and do not leave cells blank - put a zero or a ".....". Book Value Fair Value Differential Requirement 2: Give the differential balance as of 1/1/2008. Differential Balance on 1/1/2008:Requirement 4: Prepare all applicable equity method entries for the year ended, December 31, 2008. Please label each journal e Equity Method EntriesRequirement 5: Prepare the elimination entries as of December 31, 2008. Please label each journal entry. Elimination Entries
