Chap005_Day1_Classproblems_Solu

Chap005_Day1_Classproblems_Solu -...

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Solutions to Chapter 5 Day 1 In‐class Problems 1 E5-6 Majority-Owned Subsidiary Acquired at Greater than Book Value a. Eliminating entries: E(1) Common Stock – Down Corporation 40,000 Retained Earnings 85,000 Differential 21,000 Investment in Down Corporation Stock 102,200 Noncontrolling Interest 43,800 Eliminate investment balance: $21,000 = $102,200 + $43,800 - $125,000 E(2) Inventory 6,000 Buildings and Equipment 15,000 Differential 21,000 Assign differential. E(3) Accounts Payable 12,500 Accounts Receivable 12,500 Eliminate intercompany receivable/payable.
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Solutions to Chapter 5 Day 1 In‐class Problems 2 E5-6 (continued) b. Zenith Corporation and Down Corporation Consolidated Balance Sheet Workpaper December 31, 20X4 Zenith Down Eliminations Consol- Item Corp. Corp. Debit Credit idated Cash 50,300 21,000 71,300 Accounts Receivable 90,000 44,000 (3) 12,500 121,500 Inventory 130,000 75,000 (2) 6,000 211,000 Land 60,000 30,000 90,000 Buildings and Equipment 410,000 250,000 (2) 15,000
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Chap005_Day1_Classproblems_Solu -...

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