Use the following information to answer the question(s) below.
On January 1, 2014, Penelope Company acquired a 90% interest in Leah Company for $180,000 cash. On January 1, 2014, Leah Company had the following assets and liabilities:
Push-down accounting is used for the acquisition.
-On January 1, 2014, Jeff Company acquired a 90% interest in Marian Company for $198,000 cash. On January 1, 2014, Marian Company had the following assets and liabilities:
Push-down accounting is used for the acquisition.
Required:
1. Assume both companies use the entity theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2014.
2. Assume both companies use the parent company theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2014.

Question

Use the following information to answer the question(s) below.
On January 1, 2014, Penelope Company acquired a 90% interest in Leah Company for $180,000 cash. On January 1, 2014, Leah Company had the following assets and liabilities:
  Push-down accounting is used for the acquisition.
-On January 1, 2014, Jeff Company acquired a 90% interest in Marian Company for $198,000 cash. On January 1, 2014, Marian Company had the following assets and liabilities:
  Push-down accounting is used for the acquisition.
Required:
1. Assume both companies use the entity theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2014.
2. Assume both companies use the parent company theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2014.

Quizplus · Accepted Answer

The Answer of Use the following information to answer the question(s) below.
On January 1, 2014, Penelope Company acquired a 90% interest in Leah Company for $180,000 cash. On January 1, 2014, Leah Company had the following assets and liabilities:
  Push-down accounting is used for the acquisition.
-On January 1, 2014, Jeff Company acquired a 90% interest in Marian Company for $198,000 cash. On January 1, 2014, Marian Company had the following assets and liabilities:
  Push-down accounting is used for the acquisition.
Required:
1. Assume both companies use the entity theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2014.
2. Assume both companies use the parent company theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2014.

Use the Following Information to Answer the Question(s) Below