Question
Please use the following question to answer questions 14-20: On January 1, 2010, P Company purchased an 80% interest in S Company for $900,000. At
Please use the following question to answer questions 14-20:
On January 1, 2010, P Company purchased an 80% interest in S Company for $900,000. At that time, S Company had capital stock of $600,000 and retained earnings of $100,000. Differences between the fair value and the book value of the identifiable assets of Salem Company were as follows:
Fair Value in Excess of Book Value | |||
Equipment | $ 180,000 | ||
Land | 20,000 | ||
Inventory | 20,000 | ||
The book values of all other assets and liabilities of S Company were equal to their fair values on January 1, 2010. The equipment had a remaining life of five years. The inventory was sold in 2010.
S Companys net income and dividends declared in 2010 Net Income of $120,000; Dividends Declared of $30,000
Prepare JE at date of purchase (already posted)
Prepare W/P at date of purchase to eliminate the equity of S and investment of P (see above question) (already posted)
Prepare W/P to allocate the differences (see above question) (already posted)
Prepare J/E under cost method for NI and Dividends (see above question) (already posted)
I need help with these:
18. Prepare W/P entries to eliminate Dividends and convert cost to equity (see above question)
19. Prepare W/P entry to eliminate the equity of S and investment of P at 12/31 (see above question)
20. Prepare W/P to allocate differences (all inventory has been sold), and the extra depreciation entry (see above question)
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