Pumoa created Sumoa, a 100%-owned subsidiary, several years ago. For 2006, Sumoa reported net income of $260,000 and declared and paid cash dividends of $120,000. At 12/31/06, Sumoa's equity accounts were as follows:
Required:
a. What entry(s) were made in consolidation at 12/31/06, assuming the parent used the equity method?
b. What entry(s) were made in consolidation at 12/31/06, assuming the parent used the cost method?

Question

Pumoa created Sumoa, a 100%-owned subsidiary, several years ago. For 2006, Sumoa reported net income of $260,000 and declared and paid cash dividends of $120,000. At 12/31/06, Sumoa's equity accounts were as follows:
  Required:
a. What entry(s) were made in consolidation at 12/31/06, assuming the parent used the equity method?
b. What entry(s) were made in consolidation at 12/31/06, assuming the parent used the cost method?

Quizplus · Accepted Answer

The Answer of Pumoa created Sumoa, a 100%-owned subsidiary, several years ago. For 2006, Sumoa reported net income of $260,000 and declared and paid cash dividends of $120,000. At 12/31/06, Sumoa's equity accounts were as follows:
  Required:
a. What entry(s) were made in consolidation at 12/31/06, assuming the parent used the equity method?
b. What entry(s) were made in consolidation at 12/31/06, assuming the parent used the cost method?

Pumoa Created Sumoa, a 100%-Owned Subsidiary, Several Years Ago