ch6 differential example

ch6 differential example - Example of Differential...

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Example of Differential Allocation, Equity method entries, Elimination entries Earth Corporation paid $1,680,000 for a 30% interest in Tremor Corporation’s outstanding common stock on January 1, 20x4. The book values and fair values of Tremor’s net assets on January 1 are below: Book Value Fair Value Cash 400,000 400,000 Accounts Receivable (net) 700,000 700,000 Inventories (sold in 20x4) 1,000,000 1,200,000 Other current assets 200,000 200,000 Land 900,000 1,700,000 Buildings net (10 yr life to go) 1,500,000 2,000,000 Equipment net (7 yr life to go) 1,200,000 500,000 Total Assets 5,900,000 6,700,000 Accounts payable 800,000 800,000 Other current liabilities 200,000 200,000 Bonds Payable (due 1/1/20x9) 1,000,000 1,100,000 Capital stock, $10 par 3,000,000 Retained Earnings 900,000 Total Equities 5,900,000 Assume that the purchase of 30% interest gave Earth control of Tremor. Tremor Corporation reported net income of $1,200,000 for 20x4 and paid dividends of $600,000. Assume that on the date of acquisition Tremor’s building had an
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This note was uploaded on 04/18/2008 for the course ACCT cost taught by Professor Staff during the Spring '08 term at Oklahoma State.

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ch6 differential example - Example of Differential...

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