1. Please use the following question to answer questions 14-20:
2. 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:
3. Fair Value in Excess of Book Value
4. Equipment
5. $180,000
6. Land
7. 20,000
8. Inventory
9. 20,000
10. 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.
11. S Company's net income and dividends declared in 2010 Net Income of $120,000; Dividends Declared of $30,000
12. 14. Prepare JE at date of purchase

QUESTION 15

1. 15. Prepare W/P at date of purchase to eliminate the equity of S and investment of P (see above question)

QUESTION 16

1. 16. Prepare W/P to allocate the differences(see above question)

QUESTION 17

1. 17. Prepare J/E under cost method for NI and Dividends(see above question)

QUESTION 18

1. 18. Prepare W/P entries to eliminate Dividends and convert cost to equity(see above question)

QUESTION 19

1. 19. Prepare W/P entry to eliminate the equity of S and investment of P at 12/31(see above question)

QUESTION 20

1. 20. Prepare W/P to allocate differences (all inventory has been sold), and the extra depreciation entry(see above question)