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Pueblo Corporation acquired all of Spartan Company's outstanding stock on January 1, 2018, for $1,320,000 cash. Spartan's accounting records reflected net assets on that date
Pueblo Corporation acquired all of Spartan Company's outstanding stock on January 1, 2018, for $1,320,000 cash. Spartan's accounting records reflected net assets on that date of $1,034,000, although equipment with a 10 -year life was undervalued on the records by $198,000. Any recognized goodwill is considered to have an indefinite life. Spartan reports net income in 2018 of $198,000 and $220,000 in 2019. The subsidiary paid dividends of $44,000 in each of these two years. Financial figures for the year ending December 31, 2020, follow. Credit balances are indicated by parentheses. Complete the following: a. Determine the December 31, 2020, consolidated balance for each of the following accounts: - Depreciation Expense - Dividends Paid - Revenues Capella UNiversity - Equipment - Buildings - Goodwill - Common Stock b. How does the parent's choice of an accounting method for its investment affect the balances computed in requirement (a)? c. Which method of accounting for this subsidiary is the parent actually using for internal reporting purposes? d. If the parent company had used a different method of accounting for this investment, how could that method have been identified? e. What would be Pueblo's balance for retained earnings as of January 1, 2020, if each of the following methods had been in use? Consolidated balances three years after the date of acquisition. Includes questions about parent's method of recording investment for internal reporting purposes. Acquisiti
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