On January 1, 2011, Gregory Company acquired a 90% interest in Subway Company for $200,000 cash.On January 1, 2011, Subway Company had the following assets and liabilities:
The plant assets have 20 years of useful life remaining.Straight-line depreciation is used.The excess fair value over book value associated with Accounts Receivable and Inventory is realized in 2011.
In 2011, Subway reported net income of $35,000 and declared and paid common dividends of $10,000.Gregory reported Income from Subway in 2011 of $17,100.
Required:
Assume both companies use the entity theory.Prepare the elimination entry(ies)on consolidating work papers for the year ending December 31, 2011.

Question

On January 1, 2011, Gregory Company acquired a 90% interest in Subway Company for $200,000 cash.On January 1, 2011, Subway Company had the following assets and liabilities:
  The plant assets have 20 years of useful life remaining.Straight-line depreciation is used.The excess fair value over book value associated with Accounts Receivable and Inventory is realized in 2011.
In 2011, Subway reported net income of $35,000 and declared and paid common dividends of $10,000.Gregory reported Income from Subway in 2011 of $17,100.
Required:
Assume both companies use the entity theory.Prepare the elimination entry(ies)on consolidating work papers for the year ending December 31, 2011.

Quizplus · Accepted Answer

The Answer of On January 1, 2011, Gregory Company acquired a 90% interest in Subway Company for $200,000 cash.On January 1, 2011, Subway Company had the following assets and liabilities:
  The plant assets have 20 years of useful life remaining.Straight-line depreciation is used.The excess fair value over book value associated with Accounts Receivable and Inventory is realized in 2011.
In 2011, Subway reported net income of $35,000 and declared and paid common dividends of $10,000.Gregory reported Income from Subway in 2011 of $17,100.
Required:
Assume both companies use the entity theory.Prepare the elimination entry(ies)on consolidating work papers for the year ending December 31, 2011.

On January 1, 2011, Gregory Company Acquired a 90% Interest