FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:People Co. acquired 80% of Steeple Co.'s common stock
for $10,000,000 in cash on Jan. 2, 20x1. At that date,
Steeple's 56,000,000 of net assets were fairly stated,
except for an unrecorded intangible asset, favorable leases,
with a $1,000,000 value (useful life of 10 years, straight-line
amortization). The estimated fair value of the noncontrolling
interests at the acquisition date was $2,000,000. People
Co. accounts for its investment in Steeple Co. using the
equity method. There are no intra-entity transactions and
both firms are in the U.S.A It is now December 31, 20x3.
Steeple reported net income of $250,000 for the current
year, and declared and paid $40,000 in dividends. There
were no impairments of Steeple's assets in 20x1, 20x2 or
but goodwill is impaired by $100,000 in 20x3.
Show consolidating entry R (relates to recognizing
revalued assets and liabilities) that would be needed to
present consolidated financial statements for 20x3.
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