Parent Corporation purchased 80% of the stock of Sub Inc. on January 1, 2019 for $208,000, which reflected 80% of Sub’s total fair value. At that date, Sub had common stock of $120,000 and retained earnings of $80,000. Fair values equaled book values of Sub’s net assets except for the fair value of Sub’s buildings and equipment which was $24,000 greater than book value (remaining useful life of 8 years). Sub reported net income of $40,000 and dividends declared of $12,500 for 2021. At January 1, 2021, Sub reported Retained Earnings of $135,000. At December 31, 2021, Parent Corporation reported balances of: Income from Subsidiary, $29,600; Investment in Subsidiary, $266,800. There have been no goodwill impairments to date. Required: Prepare the December 31, 2021 consolidation adjusting and eliminating entries in general journal format.
Parent Corporation purchased 80% of the stock of Sub Inc. on January 1, 2019 for $208,000, which reflected 80% of Sub’s total fair value. At that date, Sub had common stock of $120,000 and
Sub reported net income of $40,000 and dividends declared of $12,500 for 2021.
At January 1, 2021, Sub reported Retained Earnings of $135,000. At December 31, 2021, Parent Corporation reported balances of: Income from Subsidiary, $29,600; Investment in Subsidiary, $266,800. There have been no
Required: Prepare the December 31, 2021 consolidation adjusting and eliminating entries in general journal format.
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