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Please help Eliminating Entries After First and Second Years During 2020, Peerless Company's whollyowned subsidiary, Safeco Inc. reported net income of $1,600,000 and declared and
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Eliminating Entries After First and Second Years During 2020, Peerless Company's whollyowned subsidiary, Safeco Inc. reported net income of $1,600,000 and declared and paid dividends of $600,000. Peerless acquired Safeco on January 2, 2020, at a cash cost of $8,000,000, which was $1,000,000 in excess of the book value of net assets acquired. Safeco's equipment (five-year life) was undervalued by $500,000. Its inventory, reported using FIFO, was undervalued by $200,000. The remaining $300,000 could not be allocated to identifiable assets and liabilities. Impairment testing indicates that goodwill was impaired by $50,000 during 2020. Safeco's beginning inventory was sold during 2020. Required a. Prepare the journal entries recorded by Peerless in 2020 to record the acquisition and apply the complete equity method. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Debit Credit To record acquisition of Safeco. To record equity in net income. Description To record dividends received. (E) (R) Cash Description Investment in Safeco Cash Investment in Safeco Investment in Safeco Equipment, net Inventory Goodwill Depreciation expense Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2020. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Credit Ref. (C) (0) Depreciation expense Goodwill impairment loss Equipment, net Goodwill 0 0 + 0 0 0 0 Debit 8000000 0 1250000 600000 0 100000 200000 50000 0 0 0 0 0 0 0 0 0 0 0 0 0 8000000 0 0 600000 0 0 0 0 0 0 0 0 0 0 b. Safeco reported net income of $2,000,000 and declared and paid dividends of $800,000 in 2021. There was no further goodwill impairment. Prepare the journal entries recorded by Peerless in 2021 to apply the complete equity method. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Debit Credit To record equity in net income. Ref. (C) Investment in Safeco Cash (E) Description (R) (0) Check Description To record dividends received. Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2021. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions). Debit 2000000 Investment in Safeco Equipment, net 0 0 0 0 0 2000000 0 0 0 0 0 0 0 0 0 0 0 Credit 0 2000000 0 0 0 0 0 0 0 0Step by Step Solution
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