Question

38) P Company purchased 90% of the common stock of S Company on January 2, 2017...

38) P Company purchased 90% of the common stock of S Company on January 2, 2017 for $900,000. On that date, S Company’s stockholders’ equity was as follows:
Common stock, $20 par value $400,000
Other contributed capital 100,000
Retained earnings 450,000
During 2017, S Company earned $200,000 and declared a $100,000 dividend. P Company uses the partial equity method to record its investment in S Company. The difference between implied and book value relates to land.
Required:
Prepared, in general journal form, all eliminating entries for the preparation of a consolidated statements workpaper on December 31, 2017.
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Answer #1

All eliminating entries for the preparation of a consolidated statements workpaper on December 31, 2017 are as follows:

Equity in subsidiary income 270000

Dividends declared s company. 90000

Investment in s company. 180000

Common stock - s 400000

Other contributed capital - s 100000

1/1 retained earnings - s. 450000

Difference b/w implied and book value - 50000

Investment in s company. 900000

Non controlling interest in equity. 100000

Land. 50000

Difference b/w implied and book value. 50000

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