Perri Company buys 80 percent of the stock of McGrath Company for $150,000.McGrath Company has contributed capital of $100,000 and retained earnings of $60,000.The eliminating entry that would appear on the work sheet for consolidating the balance sheets of two companies is:

Question

Quizplus · Accepted Answer

The correct eliminating entry removes McGrath's equity accounts and records the investment and minority interest. The goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired.

Perri Company Buys 80 Percent of the Stock of McGrath