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Prime Company holds 80 percent of Suspect Company's stock, acquired on January 1, 20X2, for $160,000. On the acquisition date, the fair value of the

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Prime Company holds 80 percent of Suspect Company's stock, acquired on January 1, 20X2, for $160,000. On the acquisition date, the fair value of the noncontrolling interest was $40,000. Suspect reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Prime uses the fully adjusted equity method in accounting for its investment in Suspect Trial balance data for the two companies on December 31, 20X6, are as follows: Suspect Company Debit Credit $ 35,00 90,000 80,00 150, eee Item cash and Accounts Receivable Inventory Land Buildings and Equipment Investment in Suspect Co. Cost of Goods Sold Depreciation and Amortization Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Gain on Sale of Equipment Prime Company Debit Credit $ 113,800 260,000 80,000 500,000 191,600 148,000 25,000 15,000 30,000 $ 205,000 60.000 200,000 300,000 322.000 240,000 20,000 60,000 15,000 5,000 5,000 $ 45,000 20,000 50,000 180,000 95,000 130,00 95,000 138,000 Retained Earnings Sales Gain on Sale of Equipment Income from Suspect Co. Total 322,800 240,000 20,eee 7,600 $1,354,600 $1,354,600 $440,000 $440,000 Additional Information 1. At the date of combination, the book values and fair values of all separately identifiable assets and liabilities of Suspect were the same. At December 31, 20X6, the management of Prime reviewed the amount attributed to goodwill as a result of its purchase of Suspect stock and concluded an impairment loss of $18,000 should be recognized in 20x6 and shared proportionately between the controlling and noncontrolling shareholders. 2.On January 1, 20X5. Suspect sold land that had cost $8,000 to Prime for $18,000. 3. On January 1, 20X6, Prime sold to Suspect equipment that it had purchased for $75,000 on January 1, 20X1. The equipment has a total economic life of 15 years and was sold to Suspect for $70,000. Both companies use straight-line depreciation 4. There was $7.000 of intercompany receivables and payables on December 31, 20x6. Required: a. Give all consolidation entries needed to prepare a consolidation worksheet for 20x6. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) X Answer is not complete. No Estry Accounts Dell 1 Investment in Suspect Co. Income from Suspect Co 40,000 > 40,000 B 2 4,000 Cash and accounts receivable Investment in Suspect Co. XIX 4,000 C 3 X 14.400 % Income from Suspect Co. Investment in Suspect Co. 14.400 20.000 D 4 Income from Suspect Co Investment in Suspect Co 20.000 2,000 3 E 5 2.000 Investment in Suspect Co. Income from Suspect Co

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