Prism Co acquired 80% of the stock of Sapphire Co for $300,000 on January 2007. At acquisition dare, Sapphire reported retained earnings of $150,000. The excess of Prism Co's acquisition cost over its share of Sapphire's book value was assigned to buildings and equipment that had a remaining life of ten years at acquisition date and deferred tax liability on the undervalued building and equipment.

The purchase consideration paid by Prism Co was proportional to Prism's share of the fair value of Sapphire Co as at acquisition date. The financial statement of the two companies for the year ended 31 December 2009 are shown below ?see attach file). Investment in Sapphire Co was carried at cost.

On January 2009, Prism Co held inventory purchased from Sapphire Co during 2008 for $15,000, which had been manufactured by Sapphire at a cost of $10,000. During 2009,Sapphire sold goods costing $40,000 to Prism Co for $60?000. Prism sold the inventory in hand at the beginning of the year, but continued to hold 40% of its 2009 purchases from Sapphire on 31 December 2009. Tax rate was 20%.

Required:

Prepare all necessary consolidation elimination and adjustment entries for the year ended 31 December 2009.

Prism Co acquired 80% of the stock of Sapphire Co for $300,000 on January 2007. At acquisition dare, Sapphire reported retained earnings of $150,000. The excess of Prism Co's acquisition cost over its share of Sapphire's book value was assigned to buildings and equipment that had a remaining life of ten years at acquisition date and deferred tax liability on the undervalued building and equipment. The purchase consideration paid by Prism Co was proportional to Prism's share of the fair value of Sapphire Co as at acquisition date. The financial statement of the two companies for the year ended 31 December 2009 are shown below. Investment in Sapphire Co was carried at cost. On January 2009, Prism Co held inventory purchased from Sapphire Co during 2008 for $15,000, which had been manufactured by Sapphire at a cost of $10,000. During 2009,Sapphire sold goods costing $40,000 to Prism Co for $60 000. Prism sold the inventory in hand at the beginning of the year, but continued to hold 40% of its 2009 purchases from Sapphire on 31 December 2009. Tax rate was 20%. Required: Prepare all necessary consolidation elimination and adjustment entries for the year ended 31 December 2009