Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 22

Three-level acquisition. You have secured the following information for Companies A, B, and C concerning their internally generated net incomes (excluding subsidiary income) and dividends paid:
1. Assume Company A acquires an 80% interest in Company B on January 1, 2011, and Company B acquires a 60% interest in Company C on January 1, 2012. Prepare the simple equity method adjusting entries made by Companies A and B for subsidiary investments for the years 2011 through 2013.
2. Assume Company B acquires a 70% interest in Company C on January 1, 2011, and Company A acquires a 90% interest in Company B on January 1, 2013. Prepare the simple equity method adjusting entries made by Companies A and B for subsidiary investments for the years 2011 through 2013.