On January 1, 20XI, Parent Company purchased 80% of the common stock of Subsidiary company for $316,000. On this date, Subsidiary had common stock, other paid-in-capital, and retained earnings of $40,000, $120,000 and $190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows: 20XI 20X2 Net income $50,000 $90,000 Dividends 10,000 20,000 On January 1, 20XI, the only tangible assets of Subsidiary that were undervalued were inventory and building. Inventory, for which FIFO is used, was worth $5,000 more than cost. Any remaining excess is goodwill. Prepare all necessary elimination entries for the consolidating worksheet of December 31, 20X2. Assume Parent uses the simple equity method of accounting for its investment in Subsidiary
On January 1, 20XI, Parent Company purchased 80% of the common stock of Subsidiary company for $316,000. On this date, Subsidiary had common stock, other paid-in-capital, and
20XI 20X2
Net income $50,000 $90,000
Dividends 10,000 20,000
On January 1, 20XI, the only tangible assets of Subsidiary that were undervalued were inventory and building. Inventory, for which FIFO is used, was worth $5,000 more than cost. Any remaining excess is
Prepare all necessary elimination entries for the consolidating worksheet of December 31, 20X2.
Assume Parent uses the simple equity method of accounting for its investment in Subsidiary
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