Paula's Pizzas purchased 80% of their supplier,Sarah's Sauces.Sarah's book values equaled fair value at the time of the acquisition.Paula sold Sarah some packaging equipment on January 2,2013 for $100,000.The equipment had a carrying value of $90,000,and original cost of $120,000,and had a remaining life of 10 years.Both Paula and Sarah depreciate their assets on the straight-line method.The equipment has no salvage value.
Required: Prepare the following entries:
1.Journal entries Paula and Sarah will prepare on their separate books in 2013.
2.Eliminating/adjusting entries on the consolidation worksheet at the end of 2013.
3.Eliminating/adjusting entries on the consolidation worksheet at the end of 2014.
Correct Answer:
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