On January 1,2014,Gregory Company acquired a 90% interest in Subway Company for $200,000 cash.On January 1,2014,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 2014.
In 2014,Subway reported net income of $35,000 and declared and paid common dividends of $10,000.Gregory reported Income from Subway in 2014 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 31,2014.

Question

On January 1,2014,Gregory Company acquired a 90% interest in Subway Company for $200,000 cash.On January 1,2014,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 2014.
In 2014,Subway reported net income of $35,000 and declared and paid common dividends of $10,000.Gregory reported Income from Subway in 2014 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 31,2014.

Quizplus · Accepted Answer

The Answer of On January 1,2014,Gregory Company acquired a 90% interest in Subway Company for $200,000 cash.On January 1,2014,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 2014.
In 2014,Subway reported net income of $35,000 and declared and paid common dividends of $10,000.Gregory reported Income from Subway in 2014 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 31,2014.

On January 1,2014,Gregory Company Acquired a 90% Interest in Subway