Use the information provided in P4.2, but assume that Puffin Industries uses the cost method to account for its investment in Sunset Coast Digital.
In problem 4
On December 31, 2012, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.8 billion cash. Paxon uses the complete equity method to report its investment. The trial balances of Paxon and Saxon at December 31, 2013, are shown below:

Several of Saxon's assets and liabilities had fair values different from their book values at the acquisition date, as follows:

Required
Prepare the working paper eliminating entries needed in consolidation at December 31, 2014.

Transcribed Image Text:

Dr (Cr) (in millions) Paxon Saxon Cash and receivables. Inventory.**...-.. $ 800 940 2,260 2,158 650 3,600 (2,020) (5,000) (500) (1,200) (2,610) 500 (30,000) (258) Investment in Saxon. Land .. 300 1.150 (1,200) (450) (100) (350) (845) 100 (10,000) Dividends ..._.e..-. 26,000 300 250 2,770 (10) 8,000 40 25 1,600 Cost of goods sold.a. Interest expense. Other operating expenses. Totals... Fair Value Book Value (in millions) Inventory (FIFO) . Land Long-term debt (overvalued) (5 years, straight-line) . $100 (50) 245 300 (110)